Global Balanced portfolio positioning intra-quarter update as of 06/25/2026

With mature but resilient economic growth and an evolving interest rate backdrop in the U.S., along with signs of improving economic and earnings growth in Europe, we have made modest adjustments across asset class exposures to manage risks and position for opportunities we see ahead.

June 25, 2026

ACTIONS and OVERVIEW:

Adjusted U.S. large-cap mid-phase equity sector exposures

• Trimmed Communication Services sector ETF holding
• Increased target weight of Info. Tech. sector ETF holding

Increased tilt toward Europe within international equities

• Added to existing Western European equity ETF holding
• Sold Emerging Asia equity ETF position

Adjusted fixed income credit and duration exposures

• Added to existing long-term Treasury bond ETF holding
• Trimmed existing intermediate Treasury bond ETF holding
• Added to existing short-term corporate bond ETF holding
• Sold intermediate corporate bond ETF position

Portfolio rebalance

We continue to see resilient economic growth in the U.S., along with reduced inflationary risks ahead.  We have adjusted U.S. mid-phase equity sector exposure given recent market movement and a modestly reduced outlook for Communication Services.  Within fixed income, we have reduced corporate exposure, as credit spreads have narrowed, and added to long-term Treasury exposure amid unusually elevated real yields.

Internationally, we see signs of improvement in Europe, as production-oriented sectors move past recent headwinds.  Meanwhile, we believe tech-heavy and increasingly concentrated Emerging Asia is becoming less attractive as growth peaks.

UPDATE DETAIL:

Adjusted U.S. large-cap mid-phase equity sector exposures

• We reduced exposure to U.S. Communication Services given fundamental risks we see for the increasingly concentrated sector (two companies make up nearly 80% of the sector’s market-cap in the S&P 500).
• The need for ongoing capital investments in data centers is expected to weigh on earnings and free cash flow growth, and it could lead to dilution from net share issuance.
• We have increased our target weight for U.S. large-cap Information Technology to maintain our desired underweight of the sector as recent outperformance has increased its weight in the market (note: participation in the tech rally already put portfolios at or above the new target).
• Info. Tech. continues to exhibit strong fundamentals, in our view, and rising earnings expectations have pushed the sector’s forward P/E down despite recent outperformance.

Increased tilt toward Europe and reduced EM Asia exposure

• We expect Europe’s relative economic and earnings growth to improve, in part tied to ample room for credit expansion, which has recently accelerated to multi-year highs.
• European earnings are expected to accelerate over the next year, driven by a various cyclical exposures that have faced challenges in recent years, including Financials, Consumer Discretionary, Industrials, and Materials.
• Emerging Asia equities are increasingly concentrated and dependent on semiconductors, which may be nearing peak growth, and some valuation metrics are near record highs.

Adjusted fixed income credit and duration exposures

• Credit spreads for longer-term corporate bonds have retraced toward historic lows, so we have reduced credit exposure and duration, as even slight widening of spreads could offset the yield benefit of longer corporate maturities.
• Real long-term Treasury yields are now near 20-year highs, and intermediate Treasury bonds could be more vulnerable to fears of rate hikes going forward, so we have increased Treasury exposure and shifted it toward long durations.