Short Term Bond Fund
November brought clearer signs of labor market cooling and a sharp drop in consumer sentiment, even as headline data remained mixed and key government releases were delayed. September payrolls came in firmer than expected at 119,000, but downward revisions left the net gain at 86,000, and higher labor force participation pushed unemployment to 4.4%. Alternative data continued to point to ongoing softening, while layoffs across major employers reinforced the weakening trend. The University of Michigan’s sentiment index fell, with short-term inflation expectations edging higher. Treasury yields moved lower while credit spreads were mixed.
Markets also struggled with a widening gap between resilient top line indicators and what households and businesses report experiencing, uncertainty over the Fed’s policy path, and questions about whether heavy AI-related investment will ultimately deliver expected returns. Despite the murky backdrop, investors now broadly expect a 25 bps rate cut at the Fed’s December meeting and additional easing in the first half of 2026.
In Short Term Bond Fund, we remain focused on disciplined rate exposure while selectively adding yield through high quality credit. We have continued to increase positions in short duration corporates, prioritizing issuers with solid balance sheets as layoff activity broadens. Agency mortgage holdings have benefited from spread tightening in the second half of the year, and overall portfolio liquidity has improved. With duration in line with category peers, the fund is positioned to capture incremental income while maintaining flexibility should rate volatility rise into year-end
Multi-Sector Bond Fund
November highlighted a steady loss of momentum in the labor market and a decline in consumer sentiment, even as headline data stayed mixed and several government releases were delayed. September’s employment report showed a headline gain of 119,000 jobs, but downward revisions reduced the effective increase to 86,000. A small rise in labor force participation moved the unemployment rate to 4.4 percent. Private and alternative indicators continued to point to softening conditions, and an expanding list of large-company layoffs added to concerns about weakening momentum. Consumer sentiment measures slipped again, with near-term inflation expectations ticking slightly higher. In fixed income, Treasury yields drifted lower while credit spreads widened a touch in investment grade and tightened in high yield.
At the same time, investors faced growing tension between resilient corporate earnings and what consumers and small businesses report experiencing on the ground. Questions around the Federal Reserve’s policy path and uncertainty about whether substantial AI-related investment will ultimately translate into earnings further blurred the outlook. Market pricing now points to a 25 basis point cut at the December meeting and additional easing during the first half of 2026.
Within Multi-Sector Bond Fund, positioning reflects these conditions. Targeted exposure to rate-sensitive areas such as agency mortgages and longer maturity investment grade credit has been beneficial as spreads have tightened this year. The portfolio continues to prioritize higher quality holdings to provide stability as economic conditions soften. In high yield, the focus remains on shorter maturity bonds from established issuers in order to support income while keeping risk in tow. A central objective this year has been raising the fund’s coupon profile so that returns rely less on interest rate movements. Liquidity has improved considerably, helped by a roughly 80 percent reduction in asset backed exposure and maintaining healthy cash reserves. Overall duration remains aligned with category peers.
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.
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.