Short Term Bond Fund
In August, the front end and belly of the Treasury curve rallied notably while long-dated yields held steady. The move was catalyzed by disappointing labor market figures and Chair Powell's Jackson Hole remarks indicating potential policy easing ahead. July's employment data showed just 73K jobs created alongside substantial prior-month revisions lower, as unemployment rose to 4.2%. This bull steepening dynamic signaled market participants' increasing conviction around near-term Fed accommodation, even as core inflation metrics held firm at 3.1% annually and producer prices moved higher.
Credit markets showed little change in spread terms, while agency MBS saw modest tightening and rate volatility eased a touch. Through these developments, we continue focusing on key objectives for Short Term Bond Fund: improving yield characteristics while preserving high credit standards.
Since January, the portfolio's 30-day SEC yield has risen through strategic repositioning away from lower-coupon securities. We've taken advantage of compelling valuations in AAA-rated agency mortgages, with August's tightening confirming our view. Additionally, we've built positions in higher-coupon corporates from established, quality issuers. As spreads moved sideways this month amid tariff-related uncertainties, we've maintained our emphasis on front-end corporate exposures that typically exhibit less sensitivity to spread movements compared to longer maturities. Portfolio liquidity has also strengthened considerably, with asset-backed holdings down 67% since year-end and further reductions possible depending on market conditions. Meanwhile, the fund's interest rate sensitivity continues to align with category peers.
Multi-Sector Bond Fund
August saw bull steepening across the yield curve as near-term rates declined sharply on deteriorating employment conditions and Powell's accommodative Jackson Hole commentary, while long-end yields proved stubborn. The labor report delivered a sobering assessment, adding merely 73K positions with 258K in negative revisions, pushing joblessness to 4.2% and bolstering arguments for monetary easing even with sticky inflation. Corporate spreads traded sideways, agencies compressed slightly, and volatility measures drifted lower as investors overlooked inflation persistence in favor of anticipated central bank support.
Multi-Sector Bond Fund maintains favorable positioning for these conditions through deliberate exposures to rate-sensitive assets including agency mortgages, which captured August's spread compression, and extended maturity investment-grade credit. The portfolio's emphasis on quality provides defensive characteristics amid softening fundamentals, underscored by the sharpest decline in manufacturing activity in nine months. Our high yield allocation remains concentrated in near-term maturities from proven issuers, balancing yield enhancement with prudent risk controls.
Improving 30-day SEC yield has been central to our approach this year, creating a more consistent, less rate-dependent return profile. We've substantially enhanced liquidity by reducing asset-backed exposure by over three-quarters and building cash reserves for tactical deployment as policy shifts and a weaker economy potentially create opportunities. Currently, Multi-Sector Bond Fund’s duration sits right within the peer group range.
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, 0.80%; Class L, 1.45%; Institutional Class, 0.80%. (2) In the interest of limiting expenses of the Fund, the Adviser has entered into a contractual expense limitation agreement with the Trust, effective May 31, 2025, so that the Fund’s ratio of total annual operating expenses is limited to 0.79% for Class A Shares, 1.44% for Class L Shares, and 0.79% for Institutional Class Shares until at least May 31, 2026.
As of the most recent prospectus, the operating expense ratios for the Yorktown Multi-Sector Bond Fund are as follows: Class A, 1.19%; Class L, 1.69%; Institutional Class, 0.69%. 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.