.jpg)
Short Term Bond Fund
October began with the government shutdown, which delayed key economic data releases and contributed to market uncertainty. Equity markets surged nonetheless, even as investors contended with a wave of corporate layoff announcements and renewed stress in private credit and regional banking sectors. Economic signals out of China pointed to slowing growth as well. Meanwhile, CPI came in slightly better than expected, though inflation remains uncomfortably elevated, and the University of Michigan’s consumer sentiment and inflation expectations surveys were largely unchanged from September. ADP private-sector employment data disappointed, showing a decline from an already downwardly revised August pace.
At its October meeting, the Federal Reserve cut rates and indicated an end to quantitative tightening. The post-meeting statement was benign, but Chair Powell’s press conference struck a more cautious note, remarking that a December cut is not a foregone conclusion. His comments tempered expectations for a sustained easing cycle and caused a partial retracement in yields late in the month.
In Short Term Bond Fund, we remain focused on our core objectives: maintaining disciplined interest-rate exposure while enhancing yield through selective credit opportunities. We have continued to build exposure in high-quality, short-duration corporates, emphasizing issuers with resilient balance sheets amid rising layoff trends. Our allocation to agency mortgage securities has performed well as spreads tightened again in October, and liquidity within the portfolio has strengthened further. With duration aligned to category peers, we remain positioned to capture incremental income while preserving flexibility should rate volatility tick up into year-end.
Multi-Sector Bond Fund
The month opened under the shadow of a government shutdown, which postponed key economic data releases and injected renewed uncertainty into markets. Persistent headlines around corporate downsizing and fresh stress among private credit and regional banks further reflected a maturing business cycle. Abroad, China’s slowdown deepened, but despite all this, domestic and international equities posted robust gains amid shifting policy expectations. Inflation readings modestly surprised to the downside but remained above target, while the University of Michigan’s sentiment and inflation expectations were largely static. Labor data reinforced the softening trend, with ADP private-sector payrolls falling well short of consensus and August’s figures revised lower.
The Federal Reserve delivered a rate cut and signaled the end of quantitative tightening at its October meeting. Yet, Chair Powell’s follow-up remarks struck a more balanced tone, cautioning that “a December cut is not a foregone conclusion.” This tempered investor confidence in a sustained easing cycle and prompted a partial rebound in yields late in the month.
Multi-Sector Bond Fund remains positioned for the current market environment, with targeted exposures to rate-sensitive assets such as agency mortgages, which have benefited from recent spread tightening, and extended-maturity investment grade credit. The portfolio continues to emphasize high-quality holdings, providing stability as economic conditions soften. In high yield, we remain focused on shorter-maturity bonds from well-established issuers to balance income generation with disciplined risk management. A key priority this year has been increasing coupon income, creating a return profile that is more stable and less dependent on interest rate movements. Liquidity has also improved significantly, as we’ve reduced asset-backed holdings by roughly 80 percent and increased cash reserves to maintain flexibility as monetary policy evolves and new opportunities emerge in a slowing economy. The fund’s duration remains in line with peers in its category.
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.