Your Investment Edge

Executive Summary The key takeaway of this note is to remind investors that risk management remains the core tenet of our investment philosophy. Markets are moving quickly as news headlines cross the tape, but investors can be assured that we are watching events closely, positioning portfolios appropriately from a risk management standpoint, and attempting to prudently take advantage of dislocations in the market. Market returns were positive early in the year even as volatility increased as concerns regarding AI funding, business model disruptions, the labor market, and private credit caused a change in market leadership early. Investor focus shifted quickly again at the end of February as the price of oil spiked higher with the start of Operation Epic Fury leading to higher global interest rates and lower equity index prices. Fortunately, AIQ’s strategies (particularly those with active security selection) generally performed well during both periods with most strategies outperforming their respective benchmarks thus far this year. What will happen going forward is difficult to know, but it will likely depend highly on how the next week or two go in the war with a wide range of possible investment outcomes. We have taken advantage of the recent spikes in volatility by adding high-yielding structured notes to our mid- and large-sized accounts but remain generally pleased with our positioning and are patiently awaiting additional opportunities. No matter what unfolds, we are prepared to adjust portfolio holdings as needed to adapt to whatever environment emerges.

All’s well that ends well. While investors endured a difficult spring fling with a bear market following competitive concerns within the popular AI trade and the President’s “Liberation Day” tariff shocker, those concerns quickly faded driving one of the strongest rallies off a bottom (April 8) in history. Stocks powered through another AI scare in November to end the year just off their all-time highs. It was the third consecutive year of double-digit gains for the S&P 500 with those gains once again led by large cap growth stocks.