The DH Smart Value Portfolio seeks companies that can earn more than their cost of capital, convert those earnings into cash, and trade at prices that leave room for a margin of safety. That combination—economic profitability, balance-sheet strength, durable cash flow, and valuation discipline—is especially useful when markets are rewarding both innovation and financial discipline.

Higher yields have improved the income available to bond investors. They have also raised the cost of being early. Our updated indicators favor inflation protection, floating-rate exposure and dollar-denominated emerging-market debt, while broad U.S. Aggregate bonds and long Treasuries face a less favorable signal mix.

We enter October overweight Japan, South Korea, Switzerland, and Taiwan. The Netherlands and the United Kingdom are neutral. Australia, Canada, China, France, Germany, and India are underweight. The portfolio continues to allocate approximately 85% of its equity holdings to Core markets and 15% to Explore markets.

The portfolio enters October overweight Information Technology and Financials, with a new modest overweight in Materials. Consumer Discretionary, Consumer Staples, and Health Care move from neutral to underweight. Communication Services remains underweight, and Industrials is underweight. Energy, Real Estate, and Utilities remain neutral.

August delivered a useful reminder: income may help cushion a bond portfolio, but it doesn’t always offset significant price declines. Government yields rose across much of the developed world as investors reconsidered inflation, central-bank policy, fiscal borrowing, and the capital required for artificial-intelligence infrastructure.

August rewarded international markets that could turn a broad theme into visible earnings. Semiconductor foundries, memory producers, automation companies, and the infrastructure behind artificial intelligence generally outperformed, while expensive or economically sensitive markets without comparable earnings confirmation tended to lag.

August rewarded two very different sources of leadership. Energy & Information Technology outperformed as crude oil rose and enthusiasm returned to the AI buildout theme. Utilities & Industrials lagged. Beneath the index, investors favored companies with current cash flow, visible demand, and the ability to fund growth without relying on cheaper money. The lesson was not that one style had won.

The DH Smart Value Portfolio seeks companies that can earn more than their cost of capital, convert those earnings into cash, and trade at prices that leave room for a margin of safety. That combination—economic profitability, balance-sheet strength, durable cash flow, and valuation discipline—is especially useful when markets are rewarding both innovation and financial discipline.

The Day Hagan Smart Core Equity portfolio seeks to invest in companies with positive economic profitability, sound balance sheets, durable cash-flow generation, and valuations that may provide a margin of safety. We believe this combination of quality, profitability, and valuation can help identify attractive long-term opportunities across market cycles.

July reminded investors that a bond can offer attractive income and still lose ground when the market reprices inflation, policy, and supply. The 3-month Treasury bill ended the month near 3.78%, only two basis points lower than in June. Farther out, the 5-year yield rose 21 basis points to 4.45%, the 10-year climbed 26 basis points to 4.74%, and the 30-year increased 31 basis points to 5.28%.

July reduced the international equity debate to two powerful forces. The first was the technology investment boom, which continued to lift semiconductor equipment, foundries, memory, data-center infrastructure, and advanced manufacturing. The second was the renewed energy shock from the Iran war.

July was a month of sharp contrasts. The S&P 500 slipped only 0.1%, but the calm index result hid a forceful rotation. Energy gained 10.8%, Financials rose 6.4%, and investors moved toward companies tied to oil, credit, defense, infrastructure, and current cash flow. Technology weakened, with semiconductor shares absorbing the sharpest selling. The market did not reject artificial intelligence.

In June, the U.S. equity market became more selective. The first half still belonged to earnings, AI infrastructure, power demand, defense spending, and companies able to protect margins in a higher-cost world. Yet the month also showed that leadership can rotate quickly when rates rise, inflation data firm up, and investors question whether the most crowded growth trades have already been priced in.

With this month’s rebalance, we are expanding the Smart Sector International opportunity set by adding South Korea, Taiwan, India, and the Netherlands to the Developed Market lineup. This is not a cosmetic change. It reflects how global market leadership has changed.

June turned fixed income into a contest between income and inflation. May payrolls, released in June, rose by 172,000, unemployment held at 4.3%, and wage growth cooled to 3.4%. Growth was firm enough to support credit, but not weak enough to make duration an easy call. Inflation was the problem. May CPI rose 4.2%, PCE rose 4.1%, and core PCE climbed to 3.4%.

The Portfolio is designed to invest in companies that we believe have the potential to deliver excess returns through positive economic profitability, solid balance sheets (quality), meaningful cash generation (profitability), and trading at considerable margins of safety (valuation). We believe these factors will continue to provide rational opportunities for the foreseeable future.

The Day Hagan Smart Core Equity Portfolio is designed to invest in companies that we believe have the potential to deliver excess returns through positive economic profitability, solid balance sheets (quality), meaningful cash generation (profitability), and trading at considerable margins of safety (valuation). We believe these factors will continue to provide rational opportunities for the foreseeable future.

Global equities entered June with a more complicated setup than the spring rally suggested. By month-end, the macro picture looked less forgiving than it had earlier in the spring. Investors still favored companies with clear profit drivers, but the broader case for risk assets became more dependent on inflation cooling, fuel prices staying contained, and central banks avoiding a policy mistake.

Global fixed income markets were choppy in May as investors balanced elevated inflation, slower labor momentum, Treasury supply, and shifting geopolitical risk. The Federal Reserve held the federal funds target range at 3.50% to 3.75% at its late-April meeting, and the minutes released in May showed policymakers focused on inflation risk, energy prices, tariffs, and uncertainty in the Middle East.

In May, the U.S. stock market extended its advance, supported by strong corporate earnings, renewed enthusiasm for artificial intelligence, and economic data that still pointed to growth, though with less breadth beneath the surface.