Global Equity 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 adjustments in U.S. and international allocations 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 and reduced EM Asia exposure

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

Portfolio rebalance

U.S. economic growth has proven resilient so far in 2026, as strong trends in technology infrastructure investment and incremental improvements in industrial activity have offset modestly slower growth in household consumption. We continue to believe the Iran conflict is unlikely to derail U.S. economic growth.  Within large-cap U.S. equities, we have reduced Communication Services exposure and adjusted the Information Technology target weight to maintain our desired underweight of the sector as its market weight has grown.

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 peak growth approaches.  As such, we have adjusted the international allocation to increase our overweight of Europe and reduce Emerging Asia exposure.

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).
• Communication Services still has stable top-line potential, but the need for ongoing capital investments in data centers is expected to drive decelerating earnings growth, eat into free cash flow growth, and could lead to potential shareholder 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 various cyclical exposures that have faced challenges in recent years, including Financials, Consumer Discretionary, Industrials, and Materials.
• Emerging Asia equity markets have become increasingly concentrated in Taiwan and S. Korea, due to their recent outperformance driven by semiconductor exposure, but we see signs the semiconductor cycle could be peaking.
• The MSCI EM Asia Index currently trades roughly in line with its long-run average forward P/E multiple, but other valuation measures, such as price-to-sales, are near record highs, which has historically been indicative of negative forward returns on a 1-to-2-year basis.