Short Term Bond Fund
In Short Term Bond Fund, we’ve focused on improving the fund’s current yield, while maintaining its high credit quality. The fund’s weighted average coupon has increased 65+ bps so far in 2025, as we’ve swapped out of several lower coupon issues. We’ve replaced many of these while taking advantage of wider spreads in AAA Agency products that offer high current income. In addition, we’ve added higher coupon corporate bonds in trusted names. Meanwhile, the fund’s liquidity profile continues to improve as the allocation to asset-backed securities has been cut by more than 50% year to date, and we continue to reduce these exposures. The fund’s duration remains comparable to the median duration within its Morningstar category.
Multi-Sector Bond Fund
Multi-Sector Bond Fund was well-prepared for the significant spread widening this spring. With spreads previously near historical tights, we took care to reduce risk over the last several months. We tactically under-weighted high yield, with the bulk of our high yield exposure residing in short duration bonds from proven issuers. The fund has benefited from its positioning within rate-driven products like Agency MBS and longer duration, investment grade corporates.
Furthermore, we’ve placed emphasis on strengthening current yield, as the fund’s weighted average coupon has increased by 30+ bps since year end. The purpose of a higher current yield is to produce more consistent returns and lessen dependence on specific economic environments or scenarios to generate performance. Additionally, liquidity has improved as we’ve reduced exposure to asset-backed securities by more than 60% so far.
The fund is also carrying more cash, enabling us to be opportunistic when that’s called for. Our duration is slightly longer than the median of the Morningstar category, but still well within the category’s typical range. We prefer a slight overweight to rate risk at the margin, and an ongoing underweight to spread risk, both of which have served the fund well in the volatile markets this year.
Past Performance is no guarantee of future results.
The performance data quoted represents past performance. Current performance may be lower or higher than the performance data quoted above. Past performance is no guarantee of future results. The investment return and principal value of an investment will fluctuate so that investor's shares, when redeemed, may be worth more or less than their original cost. For performance information current to the most recent month-end, please call toll-free 800-544-6060
Sources: Yorktown Management & Research Co., Bloomberg.
All estimates use daily fund pricing and Yorktown's standard credit quality evaluation method.
Definition of Terms
United States Treasury (UST) - the national treasury of the federal government of the United States where it serves as an executive department. The Treasury manages all of the money coming into the government and paid out by it.
Asset-Backed Security (ABS) - An asset-backed security is an investment security --a bond or note --which is collateralized by a pool of assets, such as loans, leases, credit card debt, royalties, or receivables.
Collateralized Loan Obligation (CLO) - A collateralized loan obligation is a single security backed by a pool of debt.
Basis Points (bps) - refers to a common unit of measure for interest rates and other percentages in finance. One basis point is equal to 1/100th of 1%, or 0.01%, or 0.0001, and is used to denote the percentage change in a financial instrument.
Option-Adjusted Spread (OAS) - The measurement of the spread of a fixed-income security rate and the risk-free rate of return, which is then adjusted to take into account an embedded option.
Yield to Worst - Lowest potential bond yield received without the issuer defaulting, it assumes the worst -case scenario, or earliest redemption possible under terms of the bond.
High Yield (HY) - high-yield bonds (also called junk bonds) are bonds that pay higher interest rates because they have lower cre dit ratings than investment-grade bonds. High-yield bonds are more likely to default, so they must pay a higher yield than investbonds to compensate investors.
Investment Grade (IG) - an investment grade is a rating that signifies that a municipal or corporate bond presents a relatively low risk of default.
London InterBank Offered Rate (LIBOR) - a benchmark interest rate at which major global banks lend to one another in the international interbank market for short-term loans.
Secured Overnight Financing Rate (SOFR) - a benchmark interest rate for dollar-denominated derivatives and loans that is replacing the London interbank offered rate (LIBOR).
MOVE Index - The ICE BofA MOVE Index (MOVE) measures Treasury rate volatility through options pricing.
The funds are distributed by Ulitmus Distributors, LLC. There is no affiliation between Ultimus Fund Distributors, LLC and the other firms referenced in this material.
This information is for use with concurrent or prior delivery of a fund prospectus. Investors should consider the investment objective, risks, and charges and expenses of the Fund(s) before investing. The prospectus contains this and other information about the Fund(s) and should be read carefully before investing. The prospectus may be obtained at the link above or by calling 1-800-544-6060.
Per the most current prospectus, (1) Fund total operating expense ratios are: Class A, 0.92%; Class L, 1.57%; Institutional Class, 0.92% until at least May 31, 2024. (2) In addition, the Adviser has entered into contractual expense limitation agreement with the Trust so that the Fund’s ratio of total annual operating expenses are limited to 0.84% for Class A shares and Institutional Class shares and 1.49% for Class L Shares until at least May 31, 2024.
As of the most recent prospectus, the operating expense ratios for the Yorktown Multi-Sector Bond Fund are as follows: Class A, 1.17%; Class L, 1.67%; Institutional Class, 0.67%. The Fund does not use fee waivers at this time.
The fund itself has not been rated by an independent rating agency. Ratings (other than U.S. Treasury securities or securities issued or backed by U.S. agencies) provided by Nationally Recognized Statistical Rating Organizations (NRSRO's) including Standard & Poor's, Moody's, Fitch, Kroll, Morningstar DBRS, A.M. Best, and Egan-Jones. This breakdown is not an S&P credit rating or an opinion of S&P as to the creditworthiness of such portfolio. This breakdown is provided by Yorktown Management & Research. When calculating the credit quality breakdown, the manager selects the middle rating when three or more rating agencies rate a security. When two agencies rate a security, the higher of the two ratings is used, and one rating is used if that is all that is provided. A rating of BB and below would represent below investment-grade. Ratings apply to the credit worthiness of the issuers of the underlying securities and not the fund or its shares.
Ratings may be subject to change.
Investing involves risk, including loss of principal. There is no guarantee that this, or any, investment strategy will succeed. Fixed income investments are affected by a number of risks, including fluctuation in interest rates, credit risk, and prepayment risk. In general, as prevailing interest rates rise, fixed income securities prices will fall. Diversification does not ensure a profit or guarantee against loss.
1 Includes Structured Notes, Preferred, and Corporate Bonds not rated by a Nationally Recognized Statistical Rating Organizatio n (NRSRO).
2 Duration measures the sensitivity of the price (the value of principal) of a fixed -income investment to a change in interest rates. Duration is expressed as a number of years. Rising interest rates mean falling bond prices, while declining interest rates mean rising bond prices. Spread duration is the sensitivity of the price of a security to changes in its credit spread. The credit spread is the difference between the yield of a security and the yield of a benchmark rate, such as a cash interest rate or government bond yield.
3 Rating Sensitive, Component, and Step-Up Bonds.
4 Weightings subject to change.