April 2026 Newsletter

April 6, 2026

Dear Valued Client:

“For Your Stress Test...”

I hope this letter finds you and your family well as we transition into the spring season. It is a pleasure to provide you with our quarterly reports and to share our perspectives on an increasingly complex global landscape. This past quarter’s headlines have been dominated by deepening geopolitical conflict with broadening implications. This month’s illustration captures that, while the magnitude of these global shifts can feel overwhelming, maintaining a disciplined and objective strategy remains our most critical mandate. As we stand on the precipice of structural change and face persistent uncertainty, it is essential to look beyond short-term fluctuations to support long-term resilience. We continue to focus on the quality of assets within your portfolio and make disciplined, incremental adjustments that ensure your holdings remain strictly aligned with your primary financial objectives.

The first quarter of 2026 was historically difficult for global markets. The S&P 500 retreated 4.6%, its weakest start to a year since the 2022 bear market. The Dow Jones, Nasdaq, and Bloomberg Bond Index were all in negative territory to start the first quarter of the year. While the period was defined by heightened volatility and a notable pullback in major indices, our disciplined investment process delivered positive returns despite these formidable headwinds.

Although the major benchmarks ended the quarter in negative territory, the aggregate of client portfolios rose by over two percent. This resilience is a direct result of our diversified exposure to energy and the Alternative Equities Portfolio category, alongside the Alternative Income Portfolio category. The chart below shows year-to-date results as of March 31, 2026, for our total aggregate managed portfolio. Please review your individual results included with this letter; we are available for a follow-up call or meeting should you have any questions.

Aggregate Portfolio Year-to-Date Returns

*Total Portfolio returns are reported net of fees 

While the year-to-date results highlight our ability to navigate immediate market turbulence, we remain focused on the broader horizon. Short-term outperformance is most valuable when it serves as a building block for long-term results. To provide a more comprehensive view of our strategy's endurance, the table below details our performance over more meaningful standard reporting periods of one, five, and ten years. These figures reflect our ongoing commitment to delivering steady growth across diverse market environments. 

One-, Five-, and Ten-Year Returns

*Total Portfolio returns are reported net of fees

The conflict in the Middle East and disruptions to global shipping have contributed to continued volatility in interest rates, with the 10-year U.S. Treasury yield remaining above 4.3%. This environment suggests a greater likelihood of rate increases in the future rather than near-term declines in interest rates, creating more attractive opportunities for fixed income purchases. In response, we are selectively realizing gains from equities that performed well in the prior cycle and reallocating a portion of those proceeds into the bond ladder. This strategy allows us to lock in attractive yields, enhance income stability, and modestly reduce overall portfolio risk. If elevated rates persist, this further supports increasing allocations to individual bonds.

At the same time, we are monitoring areas of the market experiencing increased scrutiny, including private credit. As part of this process, we have begun trimming our position in Blue Owl Capital (OBDC) to reduce exposure to private credit lending. While this position has solid long-term fundamentals with large cash reserves that remain intact, we believe a slightly reduced allocation is appropriate given current conditions.

We are also looking at selectively reducing some exposure to Blackstone Inc. (BX) as well. Blackstone is a leading alternative asset manager, but its global investments in credit and real estate make it sensitive to long-term economic changes and inflation. Proceeds from these adjustments are being redeployed into high quality fixed income opportunities as noted above, reducing portfolio risk while adding to “the bank,” aka our bond ladder strategy.

Each year, we selectively add new positions to the portfolio while reducing or removing other positions as appropriate. As part of this process, we are reintroducing the Gabelli Dividend & Income Trust (GDV) as an addition to our Alternative Income portfolio. Many of you will recognize this fund, as it has historically delivered meaningful success for our clients. While some have maintained this position in a limited capacity, we believe the current environment provides an opportunity to reestablish it more broadly over time this year. By positioning GDV within our Alternative Income investments, we are leveraging its unique ability to generate consistent, high-quality distributions. This transition strengthens our alternative income portfolio, providing a dependable yield-focused layer that complements your broader portfolio strategy.

GDV operates as a Closed-End Fund (CEF), allowing us to gain diversified exposure at a potentially attractive valuation relative to its underlying Net Asset Value (NAV). With an income-oriented total return approach, the fund combines long-term capital appreciation potential with consistent monthly distributions. Approximately one-third of the GDV portfolio of investments is allocated to traditionally defensive sectors such as consumer staples, healthcare, and utilities, which can help moderate volatility and provide a degree of stability within the broader portfolio allocation. At the same time, GDV maintains meaningful exposure to cyclical sectors, positioning it as a balanced, income-focused core holding rather than a purely defensive strategy. This blend offers diversification relative to technology-heavy mega-cap exposures and may help smooth portfolio outcomes over time. We intend to build the position selectively throughout the year, funded by gains and re-allocations in the portfolio.

On the operational side of our firm, after more than 10 years of dedicated service, our Office Manager, Laura, is preparing for her next chapter. Laura will begin reducing her office hours this month to spend more time with her family. Laura values the connections she has made here and is focused on ensuring a seamless transition. We are truly grateful for her years of commitment and the lasting impact she has had on our clients and our team.

To ensure our high standards of service remain on track, we have been proactive in expanding our team’s capabilities. Jeannie has been working closely with Stephenie to transition certain responsibilities and provide additional support to our administrative staff. Furthermore, we are evaluating candidates to strengthen our professional staff as we move forward. I look forward to announcing a new team member in the coming months. These investments in our team ensure that as our firm grows, our commitment to providing you with attentive, personalized service remains our top priority.

On a final and more personal note, I would like to share some wonderful news from my own family. My son, Keagan, is now in his fourth year of wrestling, a sport I had limited experience with during my own youth, but one I have come to admire.  

It has been a remarkable journey to watch him embrace the discipline this sport demands. During his first two years, Keagan struggled significantly; he was often on the losing end of his matches, and victories were few and far between. Yet he chose to persist rather than walk away. He learned to focus intently on his coaching and to grow from the lessons of those early defeats.

Today, that hard work is yielding positive accomplishments. He has become increasingly competitive, recently securing the top position in his bracket for two consecutive tournaments. I am incredibly proud to see him developing the resilience and "staying power" necessary for long-term success, a foundational skill that I know will serve him well as he navigates the challenges of life in the years to come.

I wish you and your loved ones a wonderful month ahead. As you look over your Quarterly Report, please do not hesitate to reach out to our team should you have any questions regarding your portfolio or our current outlook on the future.

Warmest Regards,

Intelligent Investment Management, LLP