By Michael Joseph, CFA
Stansberry Asset Management Deputy Chief Investment Officer
Gold is up. Way up. You probably noticed. Over the past two years the spot price of gold has more than doubled. Some gold miners are up several hundred percent over the same time period.
A big driver of the price spike has been buying by global central banks. Last year the percentage of gold holdings owned by foreign central banks surpassed holdings of U.S. Treasuries for the first time since 1996.
More recently, individual investors have shown enthusiasm for the shiny yellow metal. Interestingly, their behavior is driven by greed AND fear. In some cases, investors are hoping the momentum continues and they can ride the current wave to big gains. In other cases, investors fearful of fiat currency value erosion see gold as a safe haven in the face of persistent fiscal deficits and an astronomical pile of outstanding debt.
The move in gold prices is not an anomaly. In fact, this is typical behavior. Gold tends to have impressive and relatively short-lived spikes to the upside, followed by years or even decades of lackluster performance.
In Stansberry Asset Management’s analysis of key post-gold standard rallies, we’ve found that the average spike in gold prices tends to return over 300% over a period of about four and a half years. The current gold rally falls short on both counts. That isn’t to say that further gains are assured – but it certainly wouldn’t be unprecedented.
The question on the minds of many investors is what to do now. If you’ve owned gold through this rally, is it time to trim or completely exit? If you’ve missed the gains so far, is it too late to start a position?
These questions are complicated by the fact that gold can be especially difficult to time because of its drivers.
Take foreign central bank purchases. On one hand, gold holdings surpassing U.S. Treasuries might tell you that central banks are bulled up on gold and more purchases are sure to follow. That’s the consensus take. And I’m sure it’s true for many banks. But not all of them. And not forever. Some will have an exposure threshold in mind that won’t be crossed. Others may be tempted by record high prices to take a profit.
Then there’s individual investors. There are some true believers out there, but many others just wanting to make a quick buck. Their interest in gold will inevitably lose steam and be replaced by the next shiny object (probably moving from literal to proverbial).
Whether it’s foreign central bank plans, individual investor sentiment, or a host of other drivers like interest rates or inflation expectations – trying to predict the short-term movements in a regular and reliable way is difficult. And it’s not the game we want to play.
In our view, gold belongs as a permanent allocation for most investors that are seeking capital preservation, protection from inflation, and a hedge from a variety of calamities.
However, there are many different ways to invest in gold. These include:
Physical Gold: We believe that owning a significant amount of physical gold is an important foundation to any precious metals investment strategy.
Major Producers: Here we focus on owning well-run, established producers that have consistently achieved industry- leading returns on investment.
Emerging Producers: Often times the most attractive gold investment opportunities are valuable not for what they currently produce but for the under-appreciated amount of “pounds in the ground” that they own and plan to produce for years and decades into the future. These “junior miners” can trade at a fraction of the value of their owned gold resources and proven reserves.
Royalty Companies: These companies provide capital to miners in exchange for a percentage of their production. Their capital-efficient business models have resulted in high profit margins and outstanding returns over time.
Simply put, these different types of gold investments do relatively better (sometimes radically so) at different times. That’s why Stansberry Asset Management’s Gold strategy takes an active approach. We seek to optimize the risk/reward tradeoff by tactically allocating to different types of gold investments and to the individual issuers that have our highest convictions.
To learn more about how SAM thinks about gold, we encourage you to download our whitepaper HERE.
Disclosure: Stansberry Asset Management ("SAM") is a Registered Investment Advisor with the United States Securities and Exchange Commission. File number: 801-107061. Such registration does not imply any level of skill or training. Past performance does not guarantee future results.
We expect steady, healthy economic activity in 2026 with modest improvement in inflation and an easing Fed. We believe this should bode well for rates and risk assets, such as credit. Corporate and household balance sheets are healthy, as are corporate profit and labor income growth trends. We expect increased net corporate credit issuance driven by AI investment and a faster pace of merger and acquisition activity to present a modest supply headwind. In year two of Trump’s second term, we expect big policy surprises, such as Liberation Day, are mostly behind us and uncertainty fades while confidence grows. All told, we expect credit risk to remain low, but with spreads near historic tights we are forecasting coupon-like returns for the asset class.
For 2026, we believe the U.S. economy will slow from the current 2.3% rate (as of 3Q), falling more in-line with its long-run potential of 1.8-2.0%. We think a more cautious Fed, cracking labor market, and normalized productivity gains will serve as headwinds to GDP growth during 2026. However, we note risks appear skewed to the upside due to the fiscal stimulus baked into recent legislation. We are forecasting steady profit growth in S&P 500 corporate earnings from 10.7% estimated growth for 2025 to 11-13% growth for 2026. We expect solid, but moderating growth in business investment during 2026 driven by still very robust, but slowing growth in AI and data center investment, tax incentives from the One Big Beautiful Bill Act (OBBBA), a fading tariff drag, and lower short-term interest rates.
We anticipate the unemployment rate will be more or less stable in 2026, and consistent with year-end 2025 levels in the 4.5% area, as fiscal stimulus and investment tailwinds are offset by immigration headwinds. At the same time, we expect inflation to continue to trend modestly lower during 2026 mainly driven by trends in shelter disinflation.
In a highly unusual move, longer-term interest rates have risen while the Fed has cut short-term rates. See the chart below. This is contrary to the historical experience. We can think of four reasons for this unusual development, all of which point to a higher terminal rate when the Fed is done cutting:
The Administration’s policies, including higher tariffs, lower immigration and, thus, lower labor supply, and stimulative tax policy, which traders worry could be inflationary.
Slow progress against inflation. Year-on-year rates are going sideways.
The Fed cutting rates against the backdrop of above target inflation and a likely more dovish Fed in 2026.
Eventual increased long maturity Treasury supply.
The Fed cut rates 3 times in 2025 starting in September, but we think the Fed will take a more cautious path to begin 2026 due to a lack of clarity on current labor market conditions as a result of the government shutdown, inflation that remains stubbornly above their 2% target, and an economy still showing signs of strength. It is our view that the Fed will likely cut rates 2-3 times in 2026, with our base case calling for the first cut in June. Further cuts on the front end combined with persistently high inflation means we continue to believe the yield curve will steepen as the long end stays “higher for longer”.
More Info On Oppenheimer Investment Management.
© 2026 Oppenheimer Investment Management LLC. All rights reserved. This presentation is intended for informational purposes only. All information provided and opinions expressed are subject to change without notice. The information and statistical data contained herein have been obtained from sources we believe to be reliable. Some of the information in this document may contain projections or other forward-looking statements regarding future events or future financial performance of countries, markets or companies. Actual events or results may differ materially. OIM is a subsidiary of Oppenheimer Asset Management Inc. (“OAM”). OAM is an indirect wholly-owned subsidiary of Oppenheimer Holdings Inc. The OIM ADV Part 2A contains more information about fees and risks of the investment advisory programs offered by OIM. An index should only be compared with a mandate that has a similar investment objective. An index is not available for direct investment, and does not reflect any of the costs associated with buying and selling individual securities or management fees. Past performance does not guarantee future results. Adtrax 8782003.1
From Niche Allocation to Core Portfolio Solution
Separately managed accounts (SMAs) have evolved from a niche allocation into a core portfolio solution within the municipal bond market. As investors enter 2026, elevated issuance, shifting interest-rate expectations, and sustained demand for customization position SMAs to play an important role for those seeking tax efficiency, transparency, and active risk management. The structural advantages of the vehicle are becoming more relevant in the years ahead.
Elevated Issuance Creates Selective Opportunity
A defining feature of the 2026 environment is elevated municipal bond issuance. Supply is expected to remain robust as state and local governments fund infrastructure projects, capital improvements, and refinancing needs. While higher issuance can introduce near-term price pressure, it also creates opportunity for active managers. SMAs allow managers to target relative value across states, sectors, and maturities rather than being constrained by benchmark composition. This flexibility becomes particularly valuable when valuation dispersion widens during periods of heavy supply.
Stable Credit Fundamentals with Dispersion
Municipal credit fundamentals remain broadly stable, supported by reserve levels, disciplined budgeting practices, and essential-service revenue streams. However, aggregate stability masks differentiation beneath the surface. Sector dispersion across healthcare, transportation, education, and housing creates opportunity for active credit selection. SMAs allow managers to overweight improving credits while avoiding issuers facing structural or fiscal challenges.
Tax Efficiency and Customization
A key advantage of SMAs is tax efficiency. Direct ownership of individual bonds allows investors to manage tax lots, harvest losses, and customize portfolios to specific tax profiles, income needs, and state preferences. As tax policy uncertainty persists into and beyond the 2026 midterm elections, this control becomes increasingly valuable. Rather than relying on pooled vehicles with uniform exposures, SMA investors can align portfolios with their tax circumstances while maintaining transparency in construction.
Managing Interest-Rate Volatility
Interest-rate dynamics further support the case for SMAs. While volatility is likely to persist in 2026, the ability to actively manage duration and yield-curve positioning offers advantages. Managers can ladder maturities, adjust exposure across the curve, and take advantage of roll-down opportunities as expectations shift. Short-duration SMAs may offer a balance of capital preservation, income generation, and liquidity, delivering compelling tax-equivalent yields relative to money-market alternatives for high-bracket investors.
Taxable Municipal SMAs
Taxable municipal SMAs represent a growing opportunity within fixed-income portfolios. With spreads normalized relative to Treasuries and corporate bonds, taxable municipals offer high-quality yield and diversification benefits. For investors seeking alternatives to traditional corporate credit, taxable municipal SMAs provide a differentiated source of income supported by strong credit characteristics.
Conclusion
As investors look ahead to 2026 and beyond, elevated issuance, evolving rate dynamics, and credit dispersion favor active, flexible portfolio construction. SMAs offer tax efficiency, transparency, and adaptability as conditions change. For those seeking income, risk control, and customization in a complex fixed-income landscape, now may be an opportune time to evaluate the role SMAs can play within diversified portfolios.
For more information about One Oak Capital Management’s Fixed-Income Solutions, including Municipal Separately Managed Accounts (SMAs), please visit www.oneoakcapitalmgmt.com.
Disclaimers: One Oak might or might not employ one or all of these concepts. The following article is provided for informational purposes only and should not be construed as investment advice or an endorsement of any particular investment or manager. Information herein reflects the beliefs and opinions of One Oak Capital Management LLC (“One Oak”) as of February 2026 and are based on certain assumptions and estimates that are subject to various risks. Investors should be aware that results can vary significantly based on various factors, including investment strategies, market conditions, economic trends, and individual investment decisions. The information in this communication is subject to change without notice, and One Oak Capital Management, LLC (“One Oak”) makes no representation or warranty, express or implied, regarding the information's accuracy, completeness, or reliability.
The demand for wealth management is rising at the same time technology is improving. This is an opportunity and a challenge for an asset manager like Martin Investment Management, LLC which utilizes traditional separately managed accounts (SMAs). Over the next decade, the pressure on advisory firms will be to deliver consistently excellent outcomes amid increasing competition and fee compression. The convergence of demographic changes, regulatory complexity, and evolving client expectations has created an environment where firms face an urgent dilemma, either embrace technological transformation or accept inevitable decline. Understanding who you serve, what you solve, and how you manage becomes a strategic advantage during times of change.
Since 1989, Martin Investment Management, LLC has been serving clients in SMAs with five public equity U.S. and non-U.S. developed market strategies. We have established our investment strategies with individuals, on institutional platforms, in RIA wrap programs, and through model portfolios. Over the years the firm’s intent has not changed. We are here to serve our clients by investing in concentrated portfolios of quality public equities in SMAs and model portfolios to potentially grow their wealth while protecting their capital. We have developed an institutional operating system. Our firm’s identity is to be authentic, attentive, detailed with composure under pressure, and a service mindset consistent with professional standards.
Our firm has purposely chosen to utilize SMAs as they form the foundation of personalized investment management. Our challenge is how to be forward thinking, and technology enabled to implement SMAs efficiently as we grow because they are labor-intensive to administer. We not only need to continue to offer solid investments that have the potential to grow wealth while protecting capital, but we need to have a best-in-breed operating system for SMAs to scale and serve clients. The operations need to be able to address those areas that are hardest to scale, including portfolio construction, trading, reconciliation, and rebalancing across many different separate accounts.
Bridging the Gap Between Vision and Velocity
To address the complexity, our firm recently adopted a new software system for our front, middle, and back office, which has strengthened our firm’s ability to address all aspects in managing our SMAs. We prioritized a system that ensures that our operational processes are systematized, automated, and integrated. The software aligns with how we want clients to experience our firm and how our associates work cohesively. The goal of the new partnership is to build an infrastructure that functions to enhance the vision of the firm’s investment philosophy to a repeatable and scalable growth engine.
SMAs provide a competitive advantage in a crowded marketplace because they can be understood by clients, result in greater personalization, and provide better individual after-tax outcomes. The SMA structure allows our firm to create customized investment screens, such as excluding certain sectors or integrating preferences. Our firm believes that we have an opportunity to deepen the trust and retention of our clients by delivering portfolios that reflect the client’s individual circumstances and beliefs. We can offer individual solutions in SMAs instead of one size fits for all clients. This distinction matters, especially as client expectations evolve with the standards of transparency and customization. We can be more relevant in an environment that is increasingly complex.
The opportunity presented by the Great Wealth Transfer of more than $80 trillion and changing client demographics of younger and more female investors has never been more compelling. The firms using SMAs, that position themselves to capture this opportunity through customization, advanced technology, and operational excellence, will establish competitive advantages that can sustain growth in the future. Our firm cares about operational excellence, risk management, scalable growth, and competitive differentiation in our separately managed accounts. Technology and strategic partnerships are not optional enhancements. They are fundamental requirements for sustainable operations. As a firm that uses SMAs, we want to evolve with purpose and strategic intent in an increasingly competitive marketplace. We believe that firms that grow without losing consistency and coherence will fare better than firms that are constantly implementing products and services without purpose.
More info on Martin Investments
Martin Investment Management, LLC (“MIM”) is an equity oriented, majority female-owned Registered Investment Adviser located in Palm Beach Gardens, Florida and Evanston, Illinois. The firm focuses on five primary investment strategies. The Martin U.S. Investing strategy invests primarily in U.S. large cap equities. The Martin International Investing strategy invests in a range of non-U.S. large cap companies in the developed world that have global exposure through their products or services. The Martin Global Investing strategy invests in a range of U.S. and non-U.S. large cap companies in the developed world. The global Martin Eco-Investing strategy focuses on companies that have goals of engaging in best environmental practices and good stewardship. Martin Women’s Advantage is a global strategy that recognizes companies with women in leadership roles.
Adam Gold | Chief Investment Officer
Katam Hill LLC | adam@katamhill.com
Software investors face a paradox. Once a growth sector in technology that has defined decades of venture & public market returns now sits at a crossroads. The culprit? Artificial intelligence – specifically, the rapid evolution of large language models (LLMs) – which have introduced unprecedented questions about the fundamental economics of software businesses.
The traditional Software-as-a-Service (SaaS) model was elegant in its simplicity. Software was mostly sold by seat licenses: build once, sell many times through per-seat licensing. More employees meant more logins, more subscriptions, and more recurring revenue. The economics were elegant as well: high upfront R&D, near‑zero marginal delivery cost, and renewals that became more predictable as workflows standardized. Gross margins north of +70% was the norm since delivering software to the next customer cost only the cloud hosting bill once the software was compiled and stored.
Today, “software is broken” has become an easy narrative as SaaS companies confronts two existential challenges.
First, LLMs are reshaping white-collar work at a rapid pace. When AI can automate workflows, the software subscriptions they occupy become uncertain. Enterprise CIOs are now asking how many employees do we need in the future? If headcount flattens out or declines, so too will seat licenses. This creates genuine concern about the total addressable market for traditional enterprise software.
Second, the cost structure of AI-infused software fundamentally differs from traditional SaaS. Running inference on foundation models requires substantial compute resources that scale with usage. Where legacy software had negligible marginal costs, AI-powered features carry real delivery expenses that accumulate with every customer interaction because the answers are generated in real-time (hence the name GenAI). Gross margins that once seemed inviolable now face meaningful compression. Software companies must either absorb these costs or pass them to customers; neither option is without risk. If companies shift to consumption pricing, buyers may resist rising budgets that were built for predictable subscriptions and approvals, not variable bills and usage spikes.
Yet within this uncertainty lies a compelling contrarian bullish thesis: physical AI. While investors debate the impact on knowledge work, a parallel revolution is unfolding in the physical world. Robotics, autonomous vehicles, industrial automation, and connected devices are experiencing explosive growth. Massive construction projects and datacenter buildouts are creating unprecedented demand for intelligent physical systems. Unlike seats in a software application, these physical assets represent durable, expanding demand that grows with capital investment rather than shrinking with workforce optimization.
Consider the chart below. According to public research, the global installed base of physical AI-enabled devices—industrial robots, autonomous mobility, drones, and other intelligent systems—is projected to grow from approximately 6 million units in 2024 to over 22 million by 2029. That represents nearly +275% growth in just five years.
Software companies serving this market operate on a different model entirely: per-asset, per-device pricing. The positive inflection in number of installed devices spans across a variety of fields found at construction sites, warehouses, and utilities, such as fleet management platforms for vehicles, industrial IoT systems for connected machines, and robotics systems.
While traditional SaaS faces margin pressure and demand uncertainty, physical AI software benefits from tailwinds in automation adoption, reshoring of manufacturing, and infrastructure spending. Asset-based revenue correlates with capital expenditure cycles, which remain robust as companies invest in automation to address labor shortages. Thanks to GenAI, there is a massive infrastructure buildout underway – datacenters, manufacturing facilities, logistics networks – creating increased demand for software that orchestrates physical systems.
It is my belief after two decades of investing that the market is over‑discounting certain corners of software because of unknown variables on revenues and cost of goods on the per-seat model. The underappreciated opportunity is select, founder-led software companies that price by the asset—where AI improves the economics of physical systems and revenue scales with deployed devices and output. The contrarian insight is that the software opportunity is not disappearing, it is migrating. As LLMs reshape knowledge work, investors should look toward growth in physical AI. The companies that master software for the physical world may define the next era of technology investing, much as the SaaS pioneers defined the last era.
More info on Katam Hill LLC
By Chuck Carlson, CFA CEO, Horizon Investment Services, LLC
If you’ve been investing for a few decades, you’ve probably noticed something odd. There are fewer choices. A lot fewer.
Back in the mid-1990s, the U.S. had more than 8,000 publicly traded companies. Today, we’re down to less than 4,000 — and that number has been shrinking for years. The Wilshire 5000 Index no longer tracks anywhere near 5,000 stocks; it is closer to 3,400. This is not just a statistical quirk, but a profound change in the structure of the stock market.
Why has this happened? A few forces are at play:
Mergers and acquisitions are gobbling up publicly traded companies as well as private companies that will never go public. Since 2000, there have been more than 355,000 M&A deals worth more than $41 trillion, according to the Institute for Mergers, Acquisitions, and Alliances.
Private-equity firms are taking businesses private instead of bringing them to the market.
Regulatory and reporting costs as a result of Sarbanes-Oxley have made the public-company life less appealing for small firms.
Venture-capital money and a robust private-funding environment mean companies can stay private longer — or forever.
Aggressive stock-buyback programs have dramatically reduced the number of shares in the market.
This contraction in both companies and share counts has ripple effects far beyond just a smaller fishing pond for finding opportunities. It is reshaping index construction, sector investment (especially small-cap stocks), and overall market liquidity.
Index construction: a narrower base.
Index investing has been one of the biggest success stories of the last 30 years. But indexes are only as broad as the stocks they hold. With fewer public companies, the market is narrowing.
In indexes weighted by stock-market value, like the S&P 500 or Russell 2000, the shrinking pool means the biggest companies carry even more influence. In the S&P 500, the top 10 stocks now account for approximately 40% of the index’s value — the highest concentration in decades. This is partly because large companies have been growing, but also because the index universe has fewer midsized and smaller companies.
The small-cap Russell 2000 Index has been affected. With fewer small-cap companies available, the index often includes unprofitable and lower-quality firms just to fill the roster.
For investors, this means index returns may become more top-heavy or less representative of the market segment they track.
Impact on small-cap investing: the squeeze.
Small-caps have historically been a fertile hunting ground for outsized gains. But with fewer companies going public, the pipeline of small-caps has thinned. And when a promising small-cap does emerge, it often gets snapped up by a larger company.
Another wrinkle: Some so-called small caps in indexes today are actually “fallen angels” — once-bigger companies that have shrunk.
The upshot is that investors will need to be more selective in small-cap investing, leaning on active management or individual stock selection instead of relying solely on broad index exposure.
Bottom line: The shrinking stock market is not just a curiosity of market historians. This structural change comes with real-world consequences for how you invest.
Indexes are getting more concentrated.
Small-cap hunting grounds are narrower.
Liquidity is robust in the big leagues but patchier in the minors.
Strategies that worked in the past, such as index investing, may need a tune-up for today’s realities. Active investing, especially in the small-cap space, now looks relatively more appealing.
The good news? While the market may be shrinking, opportunities remain available.
More Info on Horizon Investment Services
Horizon Investment Services, LLC is a registered investment adviser with the United States Securities and Exchange Commission in accordance with the Investment Advisers Act of 1940. As a fiduciary adviser, Horizon is legally and ethically bound to act in the best interests of their clients. The firm manages equity, mutual fund, income, balanced, and ETF porfolios for U.S. investors. Registration with the SEC does not imply a certain level of skill or training.
Horizon Investment Services claims compliance with the Global Investment Performance Standards (GIPS®). To receive Horizon’s GIPS-compliant performance information contact Tom Hathoot at 1-219-852-3215, or write Horizon Investment Services, 7412 Calu-met Ave., Hammond, IN 46324, or email thathoot@horizoninvestment.com.
The Quadrix® stock-rating system is a proprietary product wholly-owned by Horizon Publishing Company, Horizon Investment Ser-vices’ sister company. Horizon Investment Services has contracted with Horizon Publishing Company to use the Quadrix stock-rating system for its stock-screening processes. From time to time Horizon Publishing Company may change the weightings of the various metrics that go into computing Quadrix scores.
GIPS® is a registered trademark of CFA Institute. CFA Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of the content contained herein.
CFA®: Chartered Financial Analyst®. The Chartered Financial Analyst designation is a professional designation awarded by CFA Insti-tute. A CFA Program candidate must pass three exams in the following areas: porfolio management, accounting, ethics, money man-agement, and security analysis. CFA charterholders are subject to rigorous ethics rules. CFA® and Chartered Financial Analyst® are registered trademarks owned by CFA Institute.
An investment in this strategy involves the risk of loss. Investment return and principal value will fluctuate so that the investment, when redeemed, may be worth more or less than the original investment.
Past performance is no guarantee of future results. No formula or other device being offered can, in and of itself, be used to deter-mine which securities to buy or sell.
By Nick Gower
Investment Advisor and Portfolio Manager
Climate change is a core, measurable risk factor impacting today’s global economy and diversified investor portfolios.
As a pragmatist who respects data-driven science, my investment approach is simple: companies providing products and solutions to climate change - and any firm reducing pollution like greenhouse gases (GHGs) – are smart investments.
As of September 2025, there are 1,210 globally listed equities with a science-based target for climate action (see chart). Reducing pollution like GHGs generally aligns with reducing energy costs, reducing surprise energy price increases, and reduces the risks from future lawsuits and liabilities related to polluting the air, water, and land.
Who Are Leaders and Laggards?
Leaders in pollution-reduction across any industry have goals of 4.7% lesser GHGs per year, yet are actually reducing 10.3% per year - which more than double their goals. These 491 leaders are enhancing cash flow while reducing investment risks.
Laggards in pollution-reduction have slightly more aggressive goals of 5.2% lesser GHGs per year – and only reducing 2.8% per year, or about half their goal, totaling 444 firms.
The super-laggards, including Meta (Facebook) with expanding data centers driving higher energy-related pollution and GHGs, as a group target aggressive 5.8% lesser GHGs per year, and going backwards by driving up GHGs by 10.4% per year, totaling 275 firms.
Innovators in Your Portfolios
Firms whose products directly reduce emissions or enable adaptation can see rising demand, stronger pricing power, and better growth prospects. In other words, as climate risk shows up in the system, the businesses solving it are positioned to benefit.
For investors, that dynamic offers both potential upside and a degree of resilience in portfolios that might otherwise be heavily exposed to climate‑related downside.
Positioning for Future Trends
Many opportunities abound: cleaner energy, electrification, energy efficiency, and climate action. Investments can include firms who produce heat pumps and high‑efficiency heating-ventilation-air conditioning (HVAC) systems, who enable a more intelligent, efficient electric grid, who help factories and buildings cut energy and resource use, who scale renewable power.
Established businesses with existing market share and clear runways for growth can be included. These firms’ customers are often energy‑intensive — utilities, manufacturers, data centers, commercial real estate owners—where every unit of energy, water, and waste saved has a meaningful economic impact.
Climate solutions can be “sticky”: implementing a more efficient system, smarter sensor network, or lower‑carbon energy source can produce benefits for years. Investors benefit from recurring revenues, long‑term contracts, and durable customer relationships.
Climate as Driver of Risk and Return
Add in climate hazards like extreme weather, drought, and flooding, as well as 1.5 million toxic sites across the USA, and investors need portfolios that include separately managed accounts (SMAs) to manage through these future risks.
Investing in firms providing climate solutions can result in owning companies that are helping drive down pollution and GHG emissions, improving resilience to known risks and surprises, and modernizing infrastructure.
Investments in climate action can avoid unexpected losses, yield higher productivity, and improve health of people and nature. Industrial facility upgrades to more efficient systems can unlock long‑term savings and operational benefits. This virtuous cycle—climate benefit paired with economic value—is at the heart of investment solutions that include climate action.
Climate‑solution providers can also act as a hedge against risks, especially as policy, regulation, and public concern around climate intensify.
Investing in SMAs of Climate Solutions
Separately managed accounts (SMAs) enable direct investors, advisors, wealth managers, and institutions to invest in a curated set of U.S.‑listed equities and international-based ADRs across small-, mid-, and large-caps for diversification by size and geography. As an SMA, investors retain transparency into every position, the flexibility to customize around specific constraints, and the ability to report clearly on both financial and real‑world outcomes.
Ultimately, climate risk and the clean‑energy transition are here to stay. If we do not accelerate investment into real climate solutions, we risk locking in a trajectory toward more disruption, more instability, and a less livable world for future generations.
Climate action and solutions investing, implemented thoughtfully through SMAs, offer a pragmatic way to pursue long‑term returns, manage emerging risks, and help tilt our shared future toward a world that remains both investable and livable. For more info on HIP, go to www.HIPinvestor.com
DISCLOSURES: Formed 20 years ago in 2006, HIP Investor, Inc. (“HIP”) is a registered investment adviser in the states of California, Illinois, Massachusetts, New York, North Carolina, and serves investors, advisors, and institutions nationwide. HIP offers separately managed accounts (SMAs) of diversified strategies for U.S. investors, and HIP has earned PSN Top Gun Awards. Remember: Investing risks loss of capital. This content is for information, and education, and not a formal investment recommendation.
By Liz Su, CFA, Lead Portfolio Manager, Boston Common Asset Management
Emerging markets enter 2026 from a position of strength. In 2025, the MSCI Emerging Markets Index rose 33.6% in U.S. dollar terms, materially outpacing developed markets.[1] Despite this strong performance, global allocations to emerging markets (EM) remain below long-term averages, with investor narratives too often anchored in outdated assumptions about fragility, volatility, and export dependence. We believe those narratives no longer reflect the opportunity set.
The structural composition of EM has evolved meaningfully over the past decade. Growth is increasingly driven by domestic demand, services, and technology rather than export-led manufacturing or resource extraction alone. Many central banks have strengthened policy credibility and inflation management frameworks, while local capital markets have deepened. Corporate balance sheets are healthier on average than in prior cycles, with lower leverage and greater reliance on local-currency funding.
"Index composition has also shifted meaningfully over the past decade. Technology, financial services, healthcare, and consumer-oriented businesses now represent a growing share of the EM opportunity set, reducing historical cyclicality and supporting more durable earnings growth. Meanwhile, improving policy credibility and stronger macroeconomic frameworks in many countries have enhanced resilience to global shocks. These developments have contributed to narrowing structural gaps with developed markets in areas such as inflation management, capital discipline, and disclosure standards.
Valuations reinforce the case. EM equities trade at a ~41% discount to developed markets on a forward price-to-earnings basis. At the same time, consensus expectations point to faster EM earnings growth in 2026, supported by structural semiconductor demand in North Asia, digitalization across services sectors, and cyclical recoveries in select economies. The combination of valuation discounts, improving fundamentals, and stronger earnings trajectories creates a compelling long-term risk-reward profile.
China: Separating the Economy from the Opportunity Set
China remains central to any discussion of EM, but broad macro headlines often obscure underlying differentiation. We view China as a two-track economy: Traditional growth engines (think real estate and low-end manufacturing) continue to face structural adjustment. In contrast, advanced manufacturing, AI-enabled hardware, renewable energy infrastructure, and select service industries are gaining share and strengthening global competitiveness.
For investors, this divergence requires selectivity, with governance quality, transparency, balance-sheet strength, and alignment with global standards as essential filters. Companies that demonstrate technological differentiation, credible disclosures, and diversified end markets have proven capable of compounding value even amid macro headwinds. Separating economic noise from long-term competitive positioning is critical to navigating China in 2026.
Fluctuation ≠ Fragility
Emerging markets are frequently associated with volatility, yet volatility alone does not define risk. Political narratives and election cycles can elevate short-term market swings, but institutional durability and policy continuity often remain intact. From an investment perspective, downside risk is more closely tied to leverage, governance practices, funding structures, and competitive positioning than to headline-driven fluctuations. Active stock selection allows investors to distinguish between temporary dislocation and structural impairment.
Sustainability considerations further enhance risk discipline in EM. In regions where regulatory frameworks and institutions are still evolving, companies aligned with global governance standards and responsible capital allocation practices are often better positioned to attract capital, manage regulatory change, and sustain long-term growth. We view these factors not as thematic overlays, but as indicators of durability and resilience.
What We’re WatchingAs we enter 2026, emerging markets present a more diversified, governance-conscious, and structurally grounded opportunity set than in prior decades. The prospects of a materially stronger U.S. dollar, sharper-than-expected global growth deterioration, commodity price shocks, or setbacks in EM policy credibility remain risks. Geopolitical tensions in China and parts of EMEA and Latin America could also elevate volatility. But we believe that improved structural fundamentals, valuation support, and disciplined stock selection provide meaningful buffers against these risks. For investors willing to look beyond cyclical narratives and focus on quality, balance-sheet strength, and competitive advantage, emerging markets offer the potential for durable long-term compounding supported by valuation discipline and structural evolution.
More Info on Boston Common Asset Management
[1] The MSCI World Index returned 20.6% for the calendar year 2025.
DISCLOSURE
As of 12/31/25 gross annualized returns for the Aurora Equity Carve-Out Composite are 7.46% for one year, 12.58% for three years, 10.51% for five years and 12.02% for ten years. Net of fees annualized returns for the Aurora Equity Carve-Out Composite are 6.71% for one year, 11.79% for three years, 9.74% for five years and 11.3% for ten years. Annualized returns for the Russell Midcap Index are 10.6% for one year, 14.36% for three years, 8.67% for five years and 11.01% for ten years. Past Performance is not a guarantee of future results, and individual account performance will vary based upon the different risk/return profiles of a given account. The composite is NOT a mutual fund, but a composite of individual accounts. Returns include reinvestment of dividends. 3) A copy of all Composite Performance reports is available upon request.
Investor behavior is often driven by recent performance, leading many clients (HNW’s & Institutions alike) to hire high beta or higher risk equity managers when markets feel safe and valuations are stretched. Often, this is precisely when downside risk is highest and the margin for error is lowest. The real question is how does someone whose goal is to build wealth over the long term consider risk before the sky comes crashing down?
Aurora Investment Counsel’s Growth At a Reasonable Price equity strategy is designed with this question in mind. Based in Atlanta, GA and celebrating their 30th year of their GIPS compliant track record, Aurora emphasizes fundamental analysis, valuation awareness, and risk management to help clients stay invested through inevitable market declines. While markets will always move in cycles, disciplined downside protection can help preserve capital when it matters most - allowing investors to participate more effectively in long-term growth.
Aurora is a boutique investment firm focused on customized separate account management. Aurora’s investment approach is intentionally designed for investors who value personalization, continuity, and disciplined oversight. For more than 30 years, David Yucius, CFA, has served as portfolio manager, bringing deep experience and a long-term perspective to every client relationship. He takes pride in knowing and understanding each end client’s unique objectives, risk considerations, and circumstances, allowing portfolios to be managed with precision rather than by formula. This hands-on, relationship-driven philosophy is central to Aurora’s commitment to thoughtful stewardship and enduring client outcomes.
Aurora Investment Counsel’s results highlight the value of their disciplined, risk-aware approach. As the attached chart shows, when markets are at their strongest, Aurora’s returns tend to rank lower relative to benchmarks—reflecting an emphasis on capital preservation over chasing momentum. However, when markets struggle, Aurora consistently ranks near the top, demonstrating an ability to limit downside, protect client capital, and remain resilient in difficult environments. Over full market cycles, this balance—giving up some upside in strong markets to meaningfully reduce losses in weak ones—has been a key driver of long-term wealth preservation and compounding for clients.
Aurora’s investment approach is predominantly bottom-up rather than top-down, supporting a predictable and repeatable outcome. The firm does not engage in market timing and remains fully invested in accordance with each client’s Investment Policy Statement (IPS).
The majority of Aurora’s equity investments are concentrated in the mid-cap segment, generally defined as companies with market capitalizations between $2 billion and $15 billion. Over time, Aurora clients have relied on this allocation to serve as a stabilizing core within their equity portfolios. This core approach allows clients to thoughtfully complement Aurora’s strategy with other managers who specialize in higher risk areas of the market—such as more aggressive small-cap or large-cap strategies, thereby enhancing overall diversification while maintaining balance across style boxes.
In this way, Aurora is intentionally designed to be a durable foundation rather than a tactical satellite. By providing disciplined mid-cap exposure with an emphasis on capital preservation and consistency across market cycles, Aurora allows clients and advisors to build thoughtfully around it. Adding specialized managers where appropriate—while maintaining confidence that the core of the equity portfolio remains balanced, resilient, and aligned with long-term objectives.
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By Cathleen LeskoClient Service & Marketing Manager | 203-548-9883Richard CiubaPortfolio Strategy & Trading | 646-747-5439
Separately managed accounts (SMAs) have moved from a niche solution to a core tool for advisors who want to differentiate their practice and deliver a scalable high‑touch experience.
Why SMAs Continue to Gain Momentum
SMAs appeal to today’s investors by offering transparency, control, and direct ownership. Clients value clearer visibility into their holdings and more flexibility in managing risk, taxes, and personal preferences.
For managers with decades of equity research experience, SMAs provide a direct way to apply security‑level insights developed over multiple market cycles into client portfolios. They also enable more precise tax management, including targeted tax loss harvesting and capital gain planning—capabilities that pooled vehicles simply cannot match. Advisors can adjust exposures, incorporate screens, or modify position sizes without disrupting the underlying strategy.
Key Considerations When Evaluating SMA Managers
Selecting an SMA Manager requires more than reviewing performance. Advisors increasingly look for managers who combine a repeatable investment process with the operational infrastructure needed to support customization at scale. Several factors tend to matter most:
Research depth and consistency. A manager’s philosophy should be transparent, repeatable, and supported by a robust research framework. Firms with deep, independent research histories stand out because their insights reflect experience, not short‑term trends
Portfolio construction discipline. Advisors should know how the manager sizes positions, manages risk, and adjusts to shifting market conditions. A clear, consistent framework makes it easier for advisors to communicate the approach with confidence.
Customization capabilities. Not all SMA platforms offer the same flexibility. Advisors should choose a manager who can accommodate restrictions, ESG screens, tax‑loss harvesting, or income‑oriented modifications without compromising the integrity of the strategy.
Communication and reporting. Because SMAs offer transparency, clients expect clear explanations of changes, themes, and performance drivers. Investment managers who provide accessible commentary and timely updates make it easier for advisors to maintain client confidence.
How Advisors Can Present SMAs to Clients
Discussing SMAs with clients is most effective when framed around outcomes rather than product features. Clients respond when advisors connect the strategy to their personal goals:
Transparency: Give clients a clear view of how the strategy’s diversified holdings work together to support long‑term goals.
Customization: Explain how the portfolio can be adapted to reflect personal values, income needs, or risk preferences.
Tax efficiency: Demonstrate how direct ownership enables more precise tax‑loss harvesting and capital‑gain management.
Professional oversight: Emphasize that a dedicated investment team actively manages the strategy using a disciplined, research‑driven process.
SMAs give advisors more time for meaningful conversations about goals, preferences and long‑term planning, helping strengthen client relationships.
Practical Example: Using an Equity SMA as the Portfolio Foundation
A $500,000 client portfolio pursuing a balanced 60/40 allocation. Advisors can use a hybrid structure: allocating $300,000 in an SMA actively managed using the manager’s equity model as the core of the portfolio, with the remaining $200,000 allocated in bond ETFs or individual bonds to add income and stability at low cost. This approach uses an equity model as the core while fixed income completes the balance, creating an efficient, well‑rounded portfolio even at smaller account sizes.
Differentiating an Advisory Practice with Research‑Driven SMA Solutions
In today’s complex investment environment, differentiation matters. SMAs enable advisors to provide institutional‑grade portfolio management with the flexibility to customize exposures for individual clients. By partnering with an investment manager grounded in rigorous research, advisors can deliver research‑driven portfolios with efficiency and scale—an advantage that elevates and differentiates an advisory practice.
More Info on Argus Investment Counsel, Inc.
By Chris Sessing, CIO
The stock market is hovering near an all-time high valuation with a high concentration in AI names, all against the backdrop of a weakening economy. We believe this creates a challenging investing environment where being defensive is increasingly important with the goal of mitigating large market drawdowns while still maintaining equity exposure. We believe AMI's GARP strategy, which focuses on recurring revenue companies, is especially timely.
Stock Market Factors
The S&P 500 is trading near an all-time high valuation, and P/E ratios above 20 have historically made for challenging investing environments. The chart below shows the 10-year annualized return when the S&P 500 (including dividends) is purchased at various trailing P/E levels. The trendline clearly shows that higher P/E ratios have resulted in lower returns. The only periods that generated attractive returns when bought at elevated P/E levels required the 2000 Tech bubble to do so, while negative 10-year returns occurred when stocks were purchased at that bubble's peak. Based on the current S&P 500 P/E of 25.2, the expected return is approximately 4% annualized over the next decade if the historical pattern holds.
Valuation has typically not been a great timing tool, as extended valuations can persist for some time. However, spikes in margin debt may be a more useful indicator, as they have
historically coincided with peaks in the S&P 500. Looking at market concentration yields similar conclusions, with large spikes in concentration historically preceding periods of elevated drawdown risk. Both indicators are currently at concerning levels and reinforce our defensive posture. We believe investors should not rely solely on the hope that valuations normalize gradually rather than abruptly.
The economy has slowly but steadily weakened, and the often-cited "K-shaped" economy appears to be an accurate description: higher-income consumers are generally doing fine while lower-income households are under increasing pressure. The job market softened throughout 2025, with nearly every monthly jobs report accompanied by negative prior-month revisions. Roughly half of the jobs reported as added in 2025 were later revised away, and layoffs have been rising since mid-2025. These trends suggest that the consumer foundation underpinning the economy is less resilient than headline data implies.
The Artificial Intelligence trade has been a meaningful support for both the economy and the stock market. AI could ultimately prove to be one of the great technological advances, alongside the PC, mobile phone, and internet. However, there are meaningful red flags and Tech bubble parallels that suggest the market may have gotten ahead of itself. Many companies have announced data center capital expenditure plans totaling trillions of dollars without a clear means to fund them. The large hyperscalers have largely relied on cash flow to fund these plans, though some have also taken on substantial debt, which raises risk. Evidence of an attractive return on this investment remains limited. We acknowledge that the early days of any major technology advancement will generate losses before reaching scale, but the current numbers are unprecedented in both magnitude and pace. Much of the growth outlook hinges on OpenAI and its massive spending promises, yet ChatGPT has slipped in usage rankings and OpenAI appears increasingly strained on both revenue and funding fronts. Circular financing structures present an additional risk, with several Nvidia-linked deals where the company takes an ownership stake in exchange for GPU purchases. This arrangement amounts to buying sales and is unsustainable in our view.
In summary, we continue to believe equities are among the best asset classes for generating long-term appreciation. Given this challenging backdrop, however, remaining defensive with a focus on mitigating large drawdowns is especially important. Should a drawdown occur, high-beta strategies will typically fare worse while low-beta strategies tend to hold up better.
More Info on AMI Asset Management
Disclosures
This communication is prepared and distributed by AMI Asset Management (AMI), an SEC-registered investment adviser (registration does not imply a certain level of skill or training). The information contained herein, and the opinions expressed are those of AMI as of the date of writing, prepared solely for general informational and discussion purposes. The information contained in this communication has been compiled by AMI from sources believed to be reliable; however, AMI does not make any representation as to their accuracy, completeness or correctness and does not accept liability for any loss arising from the use hereof. Such information and opinions are subject to change without notice due to changes in market or economic conditions and may not necessarily come to pass. References to specific securities are not intended as recommendations of said securities. The reader should not assume that any investments in securities, sectors and markets identified or described were or will be profitable. Investing entails risks, including possible loss of principal. Past performance is not a guide to future performance and future returns are not guaranteed. The investment strategies referenced may not be suitable or appropriate for all investors depending on their specific investment objectives and financial situation and potential investors should consult with their own financial professional before determining whether to invest in the strategy.
Traditional metrics like one-year or even three-year returns often falter in volatile environments, as 2025's market swings from Fed rate pivots to AI-driven sector booms demonstrated. PSN Top Guns frequently excelled not due to sheer luck, but because of superior decision quality that persisted across cycles.
Aapryl's proprietary models isolate these skills, such as stock selection, sector timing, or factor exposure management, via advanced multivariate regression and peer benchmarking. This approach reveals which PSN managers can sustain alpha across more than 21,000 products, even when headlines dominate short-term results.
Advisors leveraging these insights have reduced redemptions in high-outflow categories by prioritizing skill-stable strategies, turning potential outflows into long-term commitments.
Launched in early 2026, this strategic collaboration overlays Aapryl's cutting-edge analytics directly on PSN universes, generating actionable scores like "Style Consistency" (measuring peer-relative drift over time) and "Alpha Attribution" (quantifying non-market-driven decisions).
For Q4 2025 U.S. Equity Growth Top Guns, top performers averaged 15% higher skill scores than median peers, correlating with 2x volatility-adjusted outperformance during turbulent quarters. These scores draw from granular data on holdings, trades, and style drifts, providing advisors with forward-looking signals rather than rearview mirrors.
Consider a mid-cap value PSN manager from the Q3 2025 Top Guns list: Despite market-wide corrections, its 92/100 skill score in "Quality Factor Tilts" predicted resilience, delivering +3.5% alpha post-volatility.
In contrast, a large-cap growth peer with solid returns but middling skills (58/100) underperformed peers by 1.8% in Q4 due to style drift. Aapryl's tools flagged these divergences early, allowing advisors to adjust UMAs proactively.
Plan sponsors using similar reports for multi-manager sleeves reported 25% better risk-adjusted results, underscoring skills analytics as a due diligence game-changer.
To harness this revolution, incorporate skill reports into your core due diligence workflow. Start by screening PSN managers with >80 scores for anchor holdings, then blend with tax-loss harvesting and customization tools for UMAs and SMAs.
As Fed policy stabilizes and AI/tech sectors surge alongside quality growth factors, prioritize skills in adaptive tilts like momentum-quality hybrids, these will likely drive SMA inflows in a personalization-obsessed era.
Early adopters of Aapryl's PSN-enhanced platform report 20% faster portfolio construction and fewer surprises during rebalancing. Forward-thinking advisors can also layer in ESG skill filters, aligning with rising demand for values-driven customization without sacrificing returns.
