Monthly Moves: Charting Our Strategies, October 2025

Clark Capital’s Bottom-Up, Fundamental Strategies

The S&P 500 Index earnings picture remains strong, driven by Technology, Industrials, Utilities, and Financials. The earnings momentum and heavy capital expenditures made by companies have mostly been linked to the AI buildout. Valuations are in record territory with an S&P 500 Index forward P/E of 23X, increasing odds of a normal correction over the next six months.

The bond market was driven by the uncertainty of the government shutdown and the expected Federal Reserve rate cut towards the end of the month. With the government shut down for the entire month, economic data was delayed and not released throughout October. The Federal Reserve reduced overnight lending rates, but Chair Powell messaged a hawkish tone at the press conference when he said it’s “far from a foregone conclusion that the Fed will cut rates in December.” From our vantage point, it appears clear the Fed is more concerned about the weakening labor market conditions than it is about inflation remining above its 2% target. The 10-year Treasury note briefly fell below 4.0% and remains in a “lower-high-lower-low” pattern, the definition of a downtrend.

The equity portfolios remain focused on owning what we consider to be high-quality, undervalued companies with strong fundamentals and strong business momentum. Broader participation remains key for the sustainability of the market rally, but leadership from high-quality growth remains firmly entrenched. On the fixed income side, the focus in the Taxable Bond portfolio remained consistent with previous months: to keep duration slightly longer than the index and move maturing bonds into the five-year and longer portion of the yield curve.

Below are strategy updates from October:

Navigator^® All Cap Core U.S. Equity

• The portfolio is fully invested with over 74% in large-cap stocks and the remainder in mid-/small-cap companies and cash.
• The portfolio continues to balance portfolio holdings between dominant, large-cap growth companies and those anti-fragile large-, small-, and mid-cap companies, which continue to see strong business momentum.
• The three largest portfolio sectors at the end of the period were Information Technology, Financials, and Industrials.
• Our current weighting in the big six free cash flow margin monopolies is 28.8% vs. approximately 29.4% in the Russell 3000. Albeit underweight to the benchmark, Information Technology remains the largest sector weight in the strategy at 29.9%.
• To benefit from improving business fundamentals during the month, the three most recent additions to the portfolio were one of the world’s largest gold mining companies, a midstream energy company, and a financial services and technology firm.
• The three most recent exits were a specialty grocery retailer, a diversified gaming and hospitality company, and an independent exploration and energy production company.

Navigator^® High Dividend Equity

• The portfolio is positioned with approximately 96% in developed countries with the remainder in cash. The United States is the largest country weight at 88.8%, followed by the United Kingdom at 3.9%, and Ireland at 2.0%.
• Over 94% of the portfolio is in large cap with the remainder in mid cap and cash.
• Financials represent the largest sector weight at 20.9%, which is below the benchmark weight. The next three largest portfolio weights are Industrials, Health Care, and Information Technology at 15.3%, 11.5%, and 11.1%, respectively.
• To benefit from improving business fundamentals during the month, the two most recent additions to the portfolio were a company that provides trading and investment solutions and an electric utility company.
• The three most recent exits were a financial information and analytics company, an international insurance brokerage and risk management firm, and an international membership-based warehouse retailer.

Navigator^® Large Cap Growth

• The portfolio is fully invested with over 94% in large-cap stocks.
• Approximately 99% of total holdings are in developed countries with approximately 93% based in the United States.
• Over 70% of the portfolio’s holdings are derived from the 100 largest cash-flow-producing companies with high and growing cash flows, high cash-flow margins, and increasing sales.
• The three largest portfolio sectors at the end of the period were Information Technology, Communication Services, and Consumer Discretionary.
• Our current weighting in the big six free cash flow margin monopolies is 53.9% vs. approximately 49.9% in the Russell 1000 Growth. Albeit underweight to the benchmark, Information Technology remains the largest sector weight in the strategy at 49.2%.
• To benefit from improving business fundamentals during the month, the three most recent additions to the portfolio were a provider of construction, industrial maintenance, and energy infrastructure services, an off-price retailer of apparel and home goods, and a medical device company.
• The most recent exit was an online grocery delivery and pickup platform.

Navigator^® International Equity ADR

• The portfolio is positioned with ~18% in emerging markets with the balance in developed economies and cash.
• Britain, Canada, China, Ireland, Japan, and Spain are the strategy’s largest country weights, all ranging between 6% and 14%.
• The three largest portfolio sectors at the end of the period were Financials, Information Technology, and Industrials.
• To benefit from improving business fundamentals during the month, the three most recent additions to the portfolio were a British multinational bank, a Dutch company that designs and manufactures advanced photolithography equipment essential to semiconductor production, and a Japanese multinational conglomerate engaged in electronics, gaming, entertainment, and financial services.

Navigator^® Taxable Fixed Income

• Within the portfolio, the focus remained consistent with previous months: keep duration slightly longer than the index and move maturing bonds into the five-year and longer portion of the yield curve. Bonds for a notable drug store company were one such example of a swap we did to move the portfolio longer and increase yield.
• Similar trades were done with a financial services company’s bonds.
• The portfolio will continue to execute trade like these where the overall price is reduced while increasing the overall yield. This thesis of maximizing yield while also positioning to maximize total return will continue to be the near-term focus.

Navigator^® Tax-Free Fixed Income

• Technicals conspired to cheapen relative value, as slower purchasing moved the needle higher on the muni/Treasury ratio. This cheapening was welcomed here at Clark Capital, as our view has been the three- to six-year spots are overbought, a condition really exacerbated when the ratio hit a one-year low of 57% on September 22.
• The five-year ratio moved from 62% to 65% throughout the month, with perhaps a bias to move higher until a level of outright value emerges. Conversely, ratios in 10- and 30-years declined, as the wave of buying by investors late to the benefit of extension we have been highlighting this year moved rates lower on a relative basis.
• Interestingly, the muni curve is inverted again; curve flattening and possible inversion is something we have discussed here for nearly three months, but the street has remained somewhat quiet about. The 2s5s curve has averaged nine basis points (bps) for the trailing 12 months but moved definitively negative in October. It went from four bps on September 30 to close the month at -9. The change is even more dramatic if we consider the 2s10s curve, which hit a 2025 high on 8/22 of 100 bps and now comes in at 25 bps.
• To capture what was once a steeper 2s5s and 5s10s curve, the herd behavior of the funds/ETF/SMA community has taken much of that positioning advantage out of play. The curve has “warped” so much that we are now focused on counter-trading the herd mentality and finding great value propositions in the one- and two-year portion of the curve due to inversion, as well as shifting our interest in the longer maturities of our barbell investments to 13- to 15-year maturities priced to an nine- to 10-year call, where duration measure between 6-8 years, taxable equivalent yields are 5% or higher, and slower buying equates to a 68%-74% muni/Treasury ratio.

Clark Capital’s Top-Down, Quantitative Strategies

The market continued to grind higher during October, and the S&P 500 posted its sixth consecutive monthly gain. The major indices hit new record highs during the month, with the S&P 500 up 2.3%, the Russell 1000 Growth Index up 3.6%, the Russell 1000 Value Index up 0.4%, the small-cap Russell 2000 Index up 1.8%, and the MSCI All Country World Index Ex USA up 2.0%. Fixed income markets also posted gains, led by a 0.7% gain in Treasuries and a 0.4% gain in investment grade corporate bonds.

The month was not without drama. Increased trade tensions with China have settled down after last week’s meeting with Presidents Trump and Xi. The federal government shutdown continues with each side blaming the other. The Fed cut rates again last week and messaged that another rate cut in December is not a foregone conclusion.

Meanwhile, corporate earnings have posted solid gains. Earnings are beating estimates at an 85% rate. Strong earnings growth has kept this market aloft despite expensive valuations. Credit spreads have remained tight despite recent concerns of cracks in the private credit markets. Tight spreads and solid credit fundamentals have kept our tactical strategies risk on, including Fixed Income Total Return, Global Tactical, and Global Risk Management. In addition, large-cap growth’s dominance remains a constant theme, with an overweight position there in Style Opportunity.

Below are strategy updates from October:

Navigator^® Alternative

• Managed futures and multi-strategy were the top contributors in the mutual fund core, while long/short commodity and event driven were laggards.
• We own a smaller position in precious metals and have mostly switched equities for fixed income and reduced volatility.

Navigator^® Fixed Income Total Return (MultiStrategy Fixed Income)

• Our models remain positive on high yield vs. Treasuries and cash.
• October witnessed a quick 30-basis-point widening in yields early in the month, but high yield recovered almost all of that spread by the end of the month.
• The Fed’s continuing easing cycle has provided a strong boost to risky credit.

Navigator^® Global Risk Management

• Strong economic growth combined with moderating inflation gave markets a further boost in October.
• Our models should continue to favor risk-on stocks for the foreseeable future.
• Treasuries would be our favored vehicle if we turned defensive, but nothing has occurred to alter the favorable risk backdrop.

Navigator^® Global Tactical

• The Fed’s easing cycle and strong corporate earnings reports helped our credit-based models to send strong risk-on signals indicating that we do not see major fundamental roadblocks over the horizon.
• U.S. large-cap stocks continued to lead markets in October, with U.S. and international small-cap stocks lagging.

Navigator^® U.S. Sector Opportunity

• October saw market leadership narrow even further. Financials took a major hit amid concerns about bank loan portfolios.
• Technology and semiconductors stand out as market leaders, and now only aerospace & defense and biotechnology are keeping up.
• Staples, Energy, and Consumer Discretionary are persistently weak and are to be avoided.

Navigator^® U.S. Style Opportunity (MultiStrategy Equity)

• The portfolio continues to focus on large-cap and mega-cap growth stocks.
• No other factor or style ETF ranks above the S&P 500. Still, while other ETFs are not outperforming, they are producing positive gains in a bull market.

Navigator^® U.S. Strategic Beta

• At the end of October, the portfolio slightly reduced large-cap growth and added slightly to large-cap value.
• The overall portfolio is now more neutral towards the broad market, and we stand ready to become defensive upon a further rally but also to add back risk if a shorter-term correction occurs.