It is hard to believe we are already closing out the summer. This year seems to be moving particularly fast, and with plenty happening across the markets, we wanted to share a quick update on what we are seeing and a few adjustments we are making within portfolios.

Markets have continued to give investors plenty to digest, but beneath the headlines, we still see a generally constructive backdrop. Economic growth has remained resilient, corporate earnings have held up well, and the investment environment is beginning to broaden beyond just a handful of the largest companies, which is encouraging. At the same time, valuations in certain areas of the market and uncertainty around the path of interest rates are good reminders to stay disciplined rather than simply chasing what has worked best recently.

From a portfolio perspective, we continue to have a positive outlook on equities while looking for opportunities to improve the balance between risk and return across asset classes. A few areas we are currently focused on:

• Positives for equities: Earnings and economic fundamentals continue to support stocks. While valuations are elevated in parts of the market, we do not believe that alone is a reason to meaningfully reduce equity exposure.
• Broadening market participation: We continue to see opportunities beyond the mega-cap companies that have driven much of the market’s gains. Broader earnings growth and market participation could be a healthy development for diversified portfolios.
• AI remains an important long-term theme: Investment in artificial intelligence and the infrastructure needed to support it continues to create opportunities across technology, power, data centers, semiconductors, and other areas of the economy. We remain interested in the theme while keeping an eye on valuations and concentration risk.
• Staying diversified: With markets near elevated levels, we believe diversification is especially important. Instead of trying to predict the next short-term market move, our focus remains on owning a mix of assets and strategies that can perform across different environments.
• Shortening fixed-income duration: Within fixed income, we are beginning to reduce duration in portions of the portfolio. Attractive yields remain available further down the curve, allowing us to maintain meaningful income while reducing some interest-rate sensitivity and creating additional flexibility.

Overall, we remain constructive but selective. We do not see a reason to become overly defensive unless you have specific upcoming cash needs, but we also recognize that strong markets can create areas of excess. Our focus continues to be on participating in long-term growth while making incremental adjustments when we believe the risk and reward have shifted in our favor.

As always, if you would like to discuss how any of this applies to your specific situation, please feel free to reach out.