Staying Active—Not Overextended
As we close out 2025, markets are offering a more constructive backdrop—cooling inflation, resilient earnings, and a Federal Reserve that appears comfortable continuing its easing path. In this environment, the opportunity isn’t about chasing returns indiscriminately; it’s about staying actively positioned without stretching risk beyond what the moment warrants.
In our Q4 2025 Trade Memo, we outline how portfolios were adjusted to reflect this balance. Equity exposure was increased modestly, concentrating risk in our highest-conviction areas rather than spreading it thin. U.S. equities remain the engine, supported by strong earnings momentum and the continued acceleration of the AI-driven productivity cycle. Our allocations to Emerging Markets further capture critical parts of the global semiconductor and technology supply chain, while we deepened our underweight to developed international markets that lack exposure to these defining growth themes.
Importantly, this is not a one-dimensional “risk-on” shift. To manage style concentration, we refreshed U.S. factor tilts—leaning further into momentum while deliberately layering in value as a stabilizing counterweight. This approach helps soften single-factor risk while keeping portfolios aligned with durable, long-term trends.
On the fixed income side, we streamlined positioning by introducing a more dynamic, systematic bond strategy. With the inflation shock largely behind us, the focus has shifted toward actively managing duration and credit risk across changing market regimes—seeking better-valued opportunities without overcommitting.
Taken together, these moves reflect a disciplined response to a shifting macro landscape. The goal is not complacency, but clarity: staying flexible, intentional, and well-positioned as we head into the new year with momentum—and optionality—intact.
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