Market Commentary

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JULY 2020 MARKET RECAP

Market Commentary |

by Andrew Murphy, CFA Senior Director, Portfolio Management

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July was another strong month in the equity market as the S&P 500 increased by 5.6%, continuing the rebound from the coronavirus induced selloff in February and March. After four consecutive monthly increases, the market is now higher by +2.4% for the year. 2020 has been a rollercoaster year as the S&P 500 fell by nearly -34% from February 19th to March 23rd before increasing by over +47% since then. Over the past several months the market has been driven by four main factors: Covid-19, Monetary Policy, Fiscal Stimulus, and Economic Data.

Taking all factors into consideration, we shifted portfolios more defensively in recent weeks to capitalize on the increase in the stock market. This does not mean that we are forecasting an imminent decline (markets can always go further than what we or any other experts deem appropriate). Rather, we believe it is prudent portfolio and risk management to take some profits after the S&P 500 increased materially despite several risks that remain prevalent. Key risks still include an increased spread of Covid-19, tensions between the US and China that could disrupt the new trade deal, and the up¬coming elections. On the equity side, we are tilted toward high quality US large cap stocks (we allocate across regions, countries, market caps, factors, sectors, and industries). On the fixed income side, we remain focused on achieving ballast, stability, and income while accounting for short-term cash needs. We will continue to utilize our time-tested investment process based on risk management, asset allocation, and security selection as we monitor new developments and maintain critical flexibility to take advantage of opportunities as they arise.

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DISCLOSURES:

Content in this material is for general information only and not intended to provide specific
advice or recommendations for any individual.

The economic forecasts set forth in this material may not develop as predicted and there can be no
guarantee that strategies promoted will
be successful.

Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will
decline as interest rates rise and bonds are subject to availability and change in price.

The prices of small cap stocks and mid cap stocks are generally more volatile than large cap
stocks.

All indexes mentioned are unmanaged indexes which cannot be invested into directly. Unmanaged
index returns do not reflect fees, expenses, or sales charges. Index performance is not
indicative of the performance of any investment. Past performance is no guarantee of future
results.

The Standard & Poor’s 500 Index is a capitalization weighted index of 500 stocks designed to
measure performance of the broad domestic economy through changes in the aggregate market value of
500 stocks representing all major industries.

The Dow Jones Industrial Average is comprised of 30 stocks that are major factors in their
industries and widely held by individuals and insti- tutional investors.

The Russell 2000 Index is an unmanaged index generally representative of the 2,000 smallest
companies in the Russell 3000 index, which rep- resents approximately 10% of the total market
capitalization of the Russell 3000 Index.

The Russell 1000 Growth Index measures the performance of those Russell 1000 companies with higher
price-to-book ratios and higher fore- casted growth values.

Russell 1000 Value Index measures the performance of those Russell 1000 companies with lower
price-to-book ratios and lower forecasted growth values.

The Bloomberg Barclays U.S. Aggregate Bond Index is an index of the U.S. investment-grade
fixed-rate bond market, including both govern- ment and corporate bonds.

The Barclays Capital U.S. Credit Bond Index measures the performance of investment grade corporate
debt and agency bonds that are dollar denominated and have a remaining maturity of greater than one
year.

The Barclays Capital Municipal Bond Index is a broad market performance benchmark for the
tax-exempt bond market, the bonds included in this index must have a minimum credit rating of at
least Baa.

The Barclays Capital US Corporate High Yield Bond index is an index representative of the universe
of fixed-rate, non-investment grade debt.

It is important to remember that no investment strategy assures success or protects against loss. Asset allocation does not ensure a profit or protect against loss. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk. Rebalancing a portfolio may cause you to incur tax liabilities and/or transaction costs and does not assure a profit or protect against a loss. All investing involves risk which you should be prepared to bear.