May was a positive month for markets as volatility lessened and valuations rose for equities and fixed income. Tech had a huge month while Treasury yields rallied and bond spreads tightened. Within fixed income, performance was good across corporate risk, structured products, and agency debt and MBS. As we’ve become accustomed to, bond yields followed the economic data over the course of the month, with some large rallies and some ensuing stretches of retracement.
The month began with the May Federal Open Market Committee (the Fed) meeting and the target rate was left unchanged, per expectation. The Fed noted that inflation has eased over the past year but added to its statement that they don’t believe it will be appropriate to cut rates until they have “greater confidence that inflation is moving sustainably toward 2 percent.” They specifically cited a lack of progress on that front in recent months. Meanwhile, the Fed also shared plans to reduce the pace of balance sheet Treasury runoff in June. Markets continue to expect a mostly inactive Fed in 2024.
Treasuries reacted positively to the Fed meeting, and even more so to the nonfarm payrolls arriving two days later. We received a softer print of 175k vs. 240k expected, along with higher unemployment with the participation rate unchanged, and a huge rate rally was on. An increase to average hour early earnings ended up lowering the 12-month increase figure, and so while the jobs report was far from weak on its face, it was a highly reassuring one. It was one that can give the Fed confidence that the labor market is where it may need to be in order to achieve the inflation target.
The Consumer Price Index (CPI) release on the 15th had a similar feel to it, as core came right in line with forecasts, which meant market relief and better-bid Treasuries. The 0.3% gain in core prices reduced the year-over-year rate and gave rise to hopes that the higher readings to start the year were somewhat anomalous. Work remains to be done but aggregate data for the month was encouraging. Following CPI (until the in-line Personal Consumption Expenditures (PCE) release at month-end), Treasury yields mostly ticked higher throughout the second half of the month from Fedspeak. And while the Fed Minutes that came on the 22nd were of course several weeks stale, investors took note that many Fed officials potentially support not only holding rates higher for longer but have questioned whether existing policy is restrictive enough for its 2% inflation target. Some officials stated a willingness to tighten policy further if they felt it was needed, mentioning that it’s taking longer than anticipated to gain confidence in the path they have us on.
“Never let the truth get in the way of a good story.”
-Mark Twain
New Jersey is known for a few things. Some are obvious, including bagels, pizza and of course, the Sopranos. Politicians and government officials here also like to name rest stops after famous Jersey related celebrities - political, literary and pop culture alike. It’s an eclectic list that includes people like Joyce Kilmer, Clara Barton, and Jon Bon Jovi. Where New Jersey really shines though are Diners. There are a lot of them. Like modern day dinosaurs they can be found in most of the same towns around the state like they have for the past 50-plus years. The architecture of the buildings is stunning if you have the time. Art deco. Lots of art deco. Really beautiful. The menus are thick enough to make even the Cheesecake Factory jealous. You can pretty much get anything at a Diner. Cheeseburger? Sure. Greek salad? Of course. Freshly baked scrod over a rice pilaf, spinach softly sauteed in virgin olive oil, beef tenderloin tips in a wine-based au jus with a baked Alaska desert? Ehhh, well… It will be on the menu though. And that is the thing about diners. You know going in that it is best just to keep it simple. Just hit the ball down the center of the fairway and order a salad or a burger. Yet, I have sat in enough diners to watch someone talk themselves into reaching for that southwest chicken wrap, and they always spend a week regretting it. We all tend to momentarily forget what we meant to do and reach for something else on occasion. Even when there really is no reason to do it. For a second, though, for whatever the reason, we blink and think, why not. We’re seeing something very similar happen in the fixed income markets. Not that that is news. Markets tend to repeat the same mistake. It’s happened before. Investors are reaching for no particular reason really other than I guess for that brief second it just sounds good.
The asset-backed securities (ABS) market, similar to the corporate debt market, continues to see extraordinary demand for its paper. Issuers continue to churn out product, and new issuance continues to feature deals that are heavily oversubscribed at virtually every part of the capital stack, allowing dealers to tighten spreads and upset investors with allocations. In 2023, the ABS market was reported by JP Morgan to have issuance of $256 billion, which was similar to the $244 billion issued in calendar year 2022 but slightly lower than the $267 billion issued in 2021. Thus far, the ABS market seems to be on pace for what would be a five-year high, with already some $159 billion issued through the first five months of the current year.
*as of May 2024 - Source: JP Morgan
ABS issuance is typically dominated by the larger, more well-known sub-sectors such as auto, credit card and equipment leasing. For good reason, as those have the longest track record in terms of performance history and because of their familiarity, the largest investor base in the ABS universe. Nevertheless, one thing that has become more noticeable over the past several months has been the ever-increasing size of the “other” category. What is the “other” category? Well, kind of like a western omelet, a little bit of all sorts of things, sub-sectors where issuance is generally smaller and thus no one bothers to break out into its own category. Sometimes, depending on the part of the cycle we are in, issuance could be in sub-sectors we recognize like aircraft ABS, with issuance small because no one is interested in it at the moment, and other times it is because the assets securing the notes of the deal are of the type not heavily trafficked in, like litigation receivables, and so we refer to them as esoteric. Rest assured, any deal that falls into “esoteric” typically has one very important feature they all share: a very limited investor base and thus, very limited liquidity. Nevertheless, for some reason in this cycle that other category is growing in size.
Source: JP Morgan
More noteworthy, with each new deal announced in the ABS sector, there seems to be an increasing number of esoteric offerings within the other category. And if we drill a little bit further down, those are more specifically concentrated by three esoteric sub-sectors: franchise or whole business securitization (WBS), data center, and fiber. In fact, as can be seen below, in 2023 those three asset types represented some 35% of the other bucket and thus far in 2024 they represent over 45%, representing in total dollars, almost $15 billion of issuance.
Source: JP Morgan
ABS has been in existence for multiple decades at this point but it’s important to recall that while issuance can be robust, it is still small in comparison to the corporate bond universe. That sometimes gets forgotten, but the ABS investor base is indeed much smaller than one typically thinks of. There are reasons for that. There are a number of firms and investors still stinging from the Great Financial Crisis who to this day won’t invest in the asset class. There are other investors who have older guidelines that never mentioned ABS and they don’t bother to change them. There are still other investors who just don’t want to spend the time analyzing what sometimes can be more complex deals than those in the corporate space. Lastly, even if an approved investment option, there are even others who limit themselves to only a few asset types. Therefore, while ABS continues to be a strong place to find overperformance and strong credit when done correctly, as one drifts further and further away from the center of the ABS universe and out into the fringes, the investor base get smaller and smaller. Basically, a small percent of what is, historically, a smaller investor base as a whole. As such, liquidity gets less and less plentiful. Like a diner patron reaching for the beef tetrazzini, investors reaching for off-menu items in the ABS world such as WBS or data center or fiber, risk a lot of regret and especially these days, ultimately at spreads in which the reward in no way properly reflects the risk.
Source: Sifma
In the midst of this new-found love for esoteric ABS has been the rebirth of WBS. Typically focused on corporate name risk, the securities are generally backed by things such as royalties of name franchises, with definite corporate risk exposure embedded within. Names are typically focused on recognizable franchises, with the majority seemingly in the restaurant sector, including Five Guys*, Subway*, Jimmy Johns* and Qdoba* to name but a few. However, other types of businesses are sprinkled in there as well, including Massage Envy* and Planet Fitness*. Esoteric assets like WBS are thinly traded. In the worst of moments it can be difficult to find a bid and frustrating as it often seems much of the investors who dabble in the asset class are relatively uncertain what the assets truly are and have, in the past, shown little understanding of where they should trade. Nowhere was this clearer than during the early days of the pandemic when these franchises suffered greatly, it was unclear when foot traffic would return, and as the threat of downgrades appeared and in some cases, occurred, the ability to trade any of these securities became virtually impossible. When they did trade, it was at significant discounts.
There are certain other characteristics of these bonds to keep in mind, beyond even the liquidity premium typically needed to trade them. For instance, while WBS deals have an amortization schedule or expectation of some prepayment similar to other ABS deals, history tells us that the prepays are very, very slow and ultimate prepayment more likely is going to occur when the corporations are able to call the deal as part of a refinancing. This is dissimilar to, say, auto deals whose prepay windows are relatively more reliable, given they are based on a long history of performance. While some discrepancies can occur, they are usually not disruptive as they’re often shortened or extended by months and not years. Indeed, auto deals are typically a 3 year-and-in kind of risk, while WBS are considered much longer and 7 years under certain conditions isn’t unheard of.
Lastly, name recognition, and investor bias toward names and business types all play a role in how these deals price and trade. Typically, the senior class of a WBS is rated BBB- or BBB at best. And yet, because of this bias, there is a wide discrepancy on where they price. How wide of a discrepancy? In March of 2024, the latest Massage Envy deal priced with a spread of +550 bps. Three months later, the Subway deal priced at a spread of +150 bps and the HNGRY* deal priced at a spread of +320. This despite them all being rated in that same BBB- to BBB range.
Source: Bloomberg
**there are no exposures to the above firms in any Yorktown Funds fixed income portfolio
Anecdotally, we have seen moments in the past where a sub-sector like this is witness to over-demand and compressing spreads. In the past, we have seen spreads tighten in a sector like WBS in two main market environments: 1) a market where everyone is feeling giddy about credit and demand is so aggressive that people will reach for just about anything to get fully invested; and 2) in a low-rate environment when yields are so paltry that any pickup in yield is coveted. And that’s what makes the current appetite for WBS so strange. Current yields are high on a relative basis, and while credit is benign and demand strong, we certainly aren’t in the grabby environment we saw several years ago or even as far back as 2006.
What is especially noteworthy is just how spreads have compressed versus other asset classes. For instance, and as mentioned, the Subway deal recently priced their BBB offering at a spread of +150 bps. This came, again as previously mentioned, three months post a Massage Envy deal that priced at a spread of +550 bps. This all happened at a time when BBB subprime auto ABS went from +160 bps to +140 bps and BBB equipment leasing ABS went from +190 bps to +150 bps. Thus, clearly WBS moved far more aggressively than and at a significant departure from the more heavily trafficked-in sectors like subprime auto.
All of this should give investors pause. And therein lies the quandary. Current spreads in auto ABS and equipment ABS, which by far have the largest investor bases in ABS, now see the same spreads as the most recent WBS deal. As illustrated, not only do WBS have significantly smaller investor bases and high liquidity premiums, they are also longer in maturities, indicating the same credit spread at virtually twice as long in terms of maturity. Longer, more volatile credit risk with a much larger liquidity premium for the same reward is not usually a goal. Worse, the real danger occurs when a credit or market stress event happens and investors try to rid themselves of the risk, causing spreads to spike and resulting in severe haircuts on the securities being sold.
Past history is a reminder that when discrepancies such as these begin to populate the market, it is never necessarily a great moment but rather more a warning shot for what’s around the corner. More importantly, it is a good reminder on why we prefer certain asset classes within the ABS universe over others. In this particular instance, investors have become so aggressive in terms of finding ways to invest that they have managed to push certain assets to the point where true value and ultimate overperformance will be difficult to obtain.
We continue to pursue our targets in a very specific and methodical manner, and situations such as what we are seeing in WBS and esoteric assets in general in this market continue to remind us that it is important to remain disciplined in approach. There is often little to no regret over a nice cheeseburger and fries at a Diner. It always seems to hit the spot. But little upside and potentially a far more disappointing end reaching for that chicken cordon bleu.
It looked at the beginning of the month and right until the end that market participants had begun to embrace the idea that rate cuts were suddenly a near-term possibility. The 2-year treasury started off the month with a yield of around 5.0% and proceeded to rally well into the month, touching below 4.80% by mid-month. And then that evaporated and suddenly the market was back to a “higher for longer” mode. Good feelings gone. Overall the market seems ready for a rate rally but at the same time resigned to the idea that one isn’t in the cards for this year. As a result, this fickle approach can cause daily volatility with rates spiking when the collective market thinks “never” is a high probability. The Fed seems content to let things stay as they are. They seem perfectly happy in their approach and the speeches and quotes from the collective reflect a patient contentment. We do continue to anticipate a rate cut and maybe two will be sighted prior to year-end. It’s getting later in the calendar, and timing is necessary in order to seem apolitical with an election looming. However, our viewpoint hasn’t shifted away from previous expectations and, as a result, we keep the portfolio positioned in a manner that best reflects those expectations and in order to best take advantage of them. We remain positioned in a similar manner as previously dictated and where we feel will provide the best opportunities for overperformance prior to and once a rate cut occurs.
Investment grade (IG) corporate credit spreads continue to stay tight and reflect overenthusiastic demand for those exposures. Spreads remain excessively tight for those rated investment grade by rating agencies. This is also true in asset-backed securities (ABS), which at the top end of the credit stack continue to see high demand and tightening spreads. However, as we have pointed out over the past few months, below IG, or junk credits, are not seeing the same result. In the face of numerous articles and headlines of the strength of the economy, we are seeing slight and continued leakage in the lower end of the corporate credit universe. Those credits CCC, for instance, experienced a widening of some 13 bps over the course of the month. We reiterate our position that credit seems too tight in the face of what we feel are changing credit conditions. This position continues to drive our preference for staying up as high in the credit stack as possible when identifying issuers and sectors for investment as we feel the risk is more reflective of the current reward and offers some protection if conditions in the economy do experience a bump.
Liquidity, reflective of both primary and secondary market activity, remains abundant and strong. The primary market continues to impress with an influx of deals across many sectors, being met with over-demand. This is true in both corporates and ABS. This continues to help fuel the fixed income market and creates an active secondary market, albeit not quite as strong as the primary market. The slight drop off in activity or interest in secondary offerings is an opportunity for the fickle investor, as there are minor opportunities for overperformance in targeting secondary offerings at the right moment in comparison to those found in the newer, shinier primary offerings. We currently prefer secondary offerings in the ABS market, due to the historical performance aspect, where we feel better value is available. And while we do like the secondary corporate market, value seems less apparent given that there is some slight liquidity benefit in picking up older vintage corporate deals. However, liquidity is a current strength of the fixed income market and allows for ample repositioning when opportunities present themselves.
Current market conditions in the fixed income space are strong. Liquidity remains deep and strong, and there are plenty of opportunities to build positions to capture overperformance in the future. Credit remains something to keep in mind, however, as we continue to see anecdotal evidence of some further cracking at the very low ends of the credit stack. A soft landing looks more and more likely, and with a future rate cut down the road, some rate relief might also help some of those credits currently struggling under more onerous financing conditions. Nevertheless, with credit priced to perfection, we tend to prefer to be more defensive and are happy to stay up in credit in the higher liquid names. We remain on the same path as the past several months with a focus on: higher credit quality, liquidity and diversity.
Noted asset sector target or bias this month includes:
Rates are in a holding pattern. There continues to be deep examination of every economic report and that swings the forward expectations for rates with it, while the Fed seems content to let it keep playing out at current levels. At the same time, credit continues to be relatively expensive. We continue to see signs that the economy is slowing. We expect some small improvement in inflation, but some slight bumps in credit. The result is that our expectations and targets over the past few months remain very relevant today. Our preference is to be defensive, with the understanding that the current rate environment still provides future benefits in those securities that we treasure, including liquidity, strong credit and diversification. The front end of the curve (the 1-3 year maturity area) continues to be where we feel the best near-term value is, and as such, where we would expect overperformance to be lurking. There are certain advantages on an issuer-by-issuer basis in longer duration exposures, but we currently prefer shorter in terms of value. We have moved duration out, targeting specific targets as we anticipate small rallies in rates over the near-term and as a means to lock in higher yields at favorable pricing for a longer period of time.
*currently there are no exposures to these firms Five Guys, Subway, Jimmy Johns, Qdoba, Massage Envy, Planet Fitness, HNGRY in any Yorktown Funds fixed income portfolio.
Definition of Terms
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.
Curvature - A yield curve is a line that plots yields (interest rates) of bonds having equal credit quality but differing maturity dates. The slope of the yield curve gives an idea of future interest rate changes and economic activity.
Mortgage-Backed Security (MBS) - A mortgage-backed security is an investment similar to a bond that is made up of a bundle of home loans bought from the banks that issued them.
Collateralized Loan Obligation (CLO) - A collateralized loan obligation is a single security backed by a pool of debt.
Commercial Real Estate Loan (CRE) - A mortgage secured by a lien on commercial property as opposed to residential property.
CRE CLO - The underlying assets of a CRE CLO are short-term floating rate loans collateralized by transitional properties.
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.
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.
Enhanced Equipment Trust Certificate (EETC) - One form of equipment trust certificate that is issued and managed through special purpose vehicles known as pass-through trusts. These special purpose vehicles (SPEs) allow borrowers to aggregate multiple equipment purchases into one debt security.
Real Estate Investment Trust (REIT) - A company that owns, operates, or finances income-generating real estate. Modeled after mutual funds, REITs pool the capital of numerous investors.
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).
Delta - the ratio that compares the change in the price of an asset, usually marketable securities, to the corresponding change in the price of its derivative.
Commercial Mortgage-Backed Security (CMBS) - fixed-income investment products that are backed by mortgages on commercial properties rather than residential real estate.
Floating-Rate Note (FRN) - a bond with a variable interest rate that allows investors to benefit from rising interest rates.
Consumer Price Index (CPI) - a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care. It is calculated by taking price changes for each item in the predetermined basket of goods and averaging them.
Gross Domestic Product (GDP) - one of the most widely used measures of an economy's output or production. It is defined as the total value of goods and services produced within a country's borders in a specific time period—monthly, quarterly, or annually.
Perp - A perpetual bond, also known as a "consol bond" or "perp," is a fixed income security with no maturity date.
Nonfarm payrolls (NFPs) - the measure of the number of workers in the United States excluding farm workers and workers in a handful of other job classifications. This is measured by the federal Bureau of Labor Statistics (BLS), which surveys private and government entities throughout the U.S. about their payrolls.
Net Asset Value (NAV) - represents the net value of an entity and is calculated as the total value of the entity’s assets minus the total value of its liabilities.
S&P 500 - The Standard and Poor's 500, or simply the S&P 500, is a stock market index tracking the stock performance of 500 large companies listed on exchanges in the United States.
German DAX - The DAX—also known as the Deutscher Aktien Index or the GER40—is a stock index that represents 40 of the largest and most liquid German companies that trade on the Frankfurt Exchange. The prices used to calculate the DAX Index come through Xetra, an electronic trading system.
NASDAQ - The Nasdaq Stock Market (National Association of Securities Dealers Automated Quotations Stock Market) is an American stock exchange based in New York City. It is ranked second on the list of stock exchanges by market capitalization of shares traded, behind the New York Stock Exchange.
MSCI EM Index - The MSCI Emerging Markets Index captures large and mid cap representation across 24 Emerging Markets (EM) countries. With 1,382 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in each country.
Nikkei - The Nikkei is short for Japan's Nikkei 225 Stock Average, the leading and most-respected index of Japanese stocks. It is a price-weighted index composed of Japan's top 225 blue-chip companies traded on the Tokyo Stock Exchange.
Shanghai Composite - is a stock market index of all stocks (A shares and B shares) that are traded at the Shanghai Stock Exchange.
Bloomberg U.S. Agg - The Bloomberg Aggregate Bond Index or "the Agg" is a broad-based fixed-income index used by bond traders and the managers of mutual funds and exchange-traded funds (ETFs) as a benchmark to measure their relative performance.
MOVE Index - The ICE BofA MOVE Index (MOVE) measures Treasury rate volatility through options pricing.
VIX Index - The Cboe Volatility Index (VIX) is a real-time index that represents the market’s expectations for the relative strength of near-term price changes of the S&P 500 Index (SPX).
Dow Jones Industrial Average - The Dow Jones Industrial Average is a price-weighted average of 30 blue-chip stocks that are generally the leaders in their industry.
Hang Seng - The Hang Seng Index is a free-float capitalization-weighted index of a selection of companies from the Stock Exchange of Hong Kong.
STOXX Europe 600 - The STOXX Europe 600, also called STOXX 600, SXXP, is a stock index of European stocks designed by STOXX Ltd. This index has a fixed number of 600 components representing large, mid and small capitalization companies among 17 European countries, covering approximately 90% of the free-float market capitalization of the European stock market (not limited to the Eurozone).
Euro STOXX 50 - The EURO STOXX 50 Index is a market capitalization weighted stock index of 50 large, blue-chip European companies operating within eurozone nations.
CAC (France) - is a benchmark French stock market index. The index represents a capitalization-weighted measure of the 40 most significant stocks among the 100 largest market caps on the Euronext Paris (formerly the Paris Bourse).
U.S. MBS Index - The S&P U.S. Mortgage-Backed Securities Index is a rules-based, market-value-weighted index covering U.S. dollar-denominated, fixed-rate and adjustable-rate/hybrid mortgage pass-through securities issued by Ginnie Mae (GNMA), Fannie Mae (FNMA) and Freddie Mac (FHLMC).
Duration Risk - the name economists give to the risk associated with the sensitivity of a bond's price to a one percent change in interest rates.
Federal Open Market Committee (FOMC) - the branch of the Federal Reserve System (FRS) that determines the direction of monetary policy specifically by directing open market operations (OMO).
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.
High Yield (HY) - high-yield bonds (also called junk bonds) are bonds that pay higher interest rates because they have lower credit ratings than investment-grade bonds. High-yield bonds are more likely to default, so they must pay a higher yield than investment-grade bonds 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.
Exchange Traded Fund (ETF) - an exchange traded fund (ETF) is a type of security that tracks an index, sector, commodity, or other asset, but which can be purchased or sold on a stock exchange the same as a regular stock.
Federal Family Education Loan Program (FFELP) - a program that worked with private lenders to provide education loans guaranteed by the federal government.
Business Development Program (BDC) - an organization that invests in small- and medium-sized companies as well as distressed companies.
Job Opening and Labor Turnover Survey (JOLTS) Report - is a monthly report by the Bureau of Labor Statistics (BLS) of the U.S. Department of Labor counting job vacancies and separations, including the number of workers voluntarily quitting employment.
Sifma - The Securities Industry and Financial Markets Association (SIFMA) is a not-for-profit trade association that represents securities brokerage firms, investment banking institutions, and other investment firms.
Duration - A calculation of the average life of a bond (or portfolio of bonds) that is a useful measure of the bond's price sensitivity to interest rate changes. The higher the duration number, the greater the risk and reward potential of the bond.
Trust Preferred Securities (TruPS) - hybrid securities issued by large banks and bank holding companies (BHCs) included in regulatory tier 1 capital and whose dividend payments were tax deductible for the issuer.
Treasury Inflation-Protected Securities (TIPS) - are a type of Treasury security issued by the U.S. government. TIPS are indexed to inflation to protect investors from a decline in the purchasing power of their money. As inflation rises, rather than their yield increasing, TIPS instead adjust in price (principal amount) to maintain their real value. The interest rate on a TIPS investment is fixed at the time of issuance, but the interest payments keep up with inflation because they vary with the adjusted principal amount.
You should carefully consider the investment objectives, potential risks, management fees, charges and expenses of the fund before investing. The fund's prospectus contains this and other information about the fund and should be read carefully before investing. You may obtain a current copy of the fund's prospectus by calling 1-800-544-6060.
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.
Past performance is no guarantee of future results. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. There is no guarantee that this, or any, investing strategy will succeed.
Diversification does not ensure a profit or guarantee against loss.
Yorktown funds are distributed by Ultimus Fund Distributors, LLC. There is no affiliation between Ultimus Fund Distributors, LLC and the other firms referenced in this material.