Short Term Bond Fund
In June, interest rates declined as inflation continued to ease and both labor and consumer data softened. Geopolitical conflict also brought a degree of flight-to-quality bid back to the Treasury market. Amid this backdrop, we remain committed to the strategic objectives of Short Term Bond Fund—most notably, enhancing current yield while maintaining strong credit quality.
Year-to-date, the fund’s weighted average coupon has risen by nearly 80 basis points, outpacing the Morningstar category average. This improvement reflects our partial rotation away from lower coupon holdings. Meanwhile, we’ve taken advantage of wider spreads in AAA-rated agency mortgage securities this year, adding positions that offer attractive income and potential for capital appreciation. We also increased exposure to higher coupon corporate bonds from familiar, high-quality issuers. Given the likely overdone tightening in credit spreads, we’ve concentrated on shorter-duration corporates, which are less vulnerable to spread widening reversion than their longer-maturity counterparts.
Importantly, the fund’s liquidity profile has strengthened significantly. We’ve reduced exposure to asset-backed securities by 66% year-to-date, and we’ll consider further reductions going forward. Overall, the fund’s duration remains in line with its Morningstar category peers.
Multi-Sector Bond Fund
In June, Multi-Sector Bond Fund benefited from declining interest rates and tighter credit spreads. Softer economic data, progress on U.S.-China trade negotiations, and a relatively uneventful Federal Reserve meeting contributed to the move lower in yields.
The fund remains well positioned for this environment, with its allocations to rate-sensitive sectors such as Agency MBS and longer duration investment grade corporates. At the same time, its quality credit profile is well suited to weather a moderating economic backdrop, as suggested by recent macroeconomic trends. In light of potential economic softening, we’ve concentrated our high yield exposure in short duration bonds from well-established issuers to mitigate risk.
A key focus this year has been strengthening the fund’s distribution yield. The fund’s liquidity profile has also improved substantially, with asset-backed securities exposure reduced by nearly 75% year-to-date. Additionally, we’ve raised the fund’s cash position, providing flexibility to respond to new opportunities as they arise. Meanwhile, Multi-Sector Bond Fund’s duration is slightly above the Morningstar category average but remains comfortably within both current and historical category ranges.
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.