Second Quarter 2025 Client Investor Letter

Just three months ago, it was unclear whether markets were on the brink of a deeper bear market or simply going through a typical correction. The first half of 2025 has been marked by extreme volatility, yet both year-to-date equity and fixed income returns have ended up close to their historical averages. It’s a powerful reminder of why sticking to a long-term investment plan matters, especially during uncertain times.

Most of our commentary on the market action this quarter is the opposite of what it was a quarter ago. We navigated the volatility effectively, guided by our core investment principles: knowledge-based conviction, patience, and disciplined risk management. In the attached letter, we discuss:

• Tariffs remain a key source of uncertainty, even as the broader economic backdrop stays healthy, supported by the recently passed tax legislation.
• Market data paints an optimistic picture for equities, though anecdotal signals still warrant caution.
• We revisit the U.S. vs. international equities debate, sharing updated conclusions from our ongoing research and discussions.
• Rising long-term bond yields present risks, reinforcing our focus on shorter-duration bonds, where yields remain compelling.