July 2026 Newsletter

July 6, 2026

“Celebrating the Fourth of July”

Dear Client:

We hope you enjoyed a safe and happy holiday last week as our nation celebrated a monumental milestone: 250 years of American independence. Over the past two and a half centuries, our country has faced wars, economic downturns, and deep uncertainties. Through it all, the American people have continued to adapt, innovate, and move forward with resilience and optimism.

To celebrate the holiday, my family and I took a road trip to Meeker, Colorado. We enjoyed a small-town rodeo, a live concert, and a Fourth of July parade that was followed by a watermelon eating contest where my son, Keagan, managed to take third place. We also witnessed one of the best fireworks celebrations I have seen in years. I learned that Meeker hosted one of the few permitted fireworks shows in the entire state of Colorado this year due to dry conditions. This experience was a wonderful reminder of the strength, community, and joy that can be found in the heart of our country.

In many ways, the small-town celebration mirrors the steady, quiet endurance of the American economy. Navigating the financial markets requires the same patience and long-term vision that defines our collective history. Much like the careful planning required to host a fireworks show during a dry summer, managing an investment portfolio today requires a delicate balance of celebrating current successes while carefully preparing for the environment around us.

As we reach the midpoint of 2026, the economic landscape presents what some market observers describe as a "split verdict," with a striking contrast between corporate resilience and consumer anxiety.

The bull case certainly has some substance. Corporate earnings are booming and are the strongest they have been in years. This growth is heavily supported by substantial investments in artificial intelligence infrastructure, which has driven robust performance within the technology, communication services, and energy sectors. For the 12-month period ending June 30, 2026, broad domestic equity markets rose approximately 20%. This strong momentum has contributed to highly favorable results across our aggregate managed portfolios.

Beyond that perspective, the broad stock market indexes obscure a much more complicated picture that requires careful management:

Concentrated Growth: Although positive returns in the equity markets are broadening out, a handful of mega-cap technology companies still dominate equity market returns.
Consumer Pressure: While stock investors are enjoying high equity market returns, consumer sentiment outside the stock market remains at historical lows. The average consumer faces negative inflation-adjusted wage growth and low personal savings.
Sticky Inflation: "Supercore" inflation, which measures services excluding housing, has risen to an uncomfortable 3.5% or higher lately, largely driven by energy sector pressures.
Federal Reserve: With sticky inflation and a new Federal Reserve chair who may not feel inclined to rescue a richly valued market at the first sign of stress, interest rates will likely remain within the 3.50% to 3.75% target range for now.
Competitive Bonds: The bond market is increasingly competitive with equities on a risk-adjusted basis, offering a legitimate alternative for balanced portfolios.

For an overview of the total managed portfolio performance results over the past 12 months, the graphs and table below show the aggregate equity portfolio is up 24.5%, with the domestic equity portfolio up 29.7%. The aggregate income portfolio is up 8.4%, boosted by returns in the alternative income category, which is up 17.5%.

For individual results within the portfolio, here are the top performers and lowest performers over the past 12 months by category:

The top performers in the Domestic Portfolio were Columbia Seligman Technology Fund (STK) up 89.7%, Royce Micro-Cap Fund (RMT) up 69.9%, and Aberdeen Healthcare Investors (HQH) up 59.7%, while the lowest performers in this category were still positive, with Central Securities (CET) up 15.6%, Source Capital (SOR) up 11.9%, and SRH Total Return Fund (STEW) up 5.5%.
In the Alternative Equity portfolio, the top performers were Albemarle Corp (ALB) up 119.5%, Rio Tinto (RIO) up 70.6%, and Apple Hospitality REIT (APLE) up 56.5%, while the lowest performers in this category were American Tower Corp. (AMT) down 23.2%, Constellation Energy Corp. (CEG) down 22.6%, and Blackstone Inc. (BX) down 18.4%.
In the Alternative Income category, the top two performers were Ellsworth Growth and Income (ECF) up 39.3% and Gabelli Dividend and Income (GDV) up 20.7%, while the lowest performing funds in this category were Blue Owl Corp (OBDC) down 19.1%, while Cohen and Steers Infrastructure Fund (UTF) was up 10.1%.

While 12-month market returns of above 10% are excellent, we continue to emphasize the importance of looking at longer time horizons. We measure our ultimate success against the 6% to 8% simple averages established in your individual Investment Policy Statement.

We remain optimistic about long-term corporate productivity and technological growth, but we are also closely monitoring the risks associated with consumer pressure and central bank policy. Our management approach continues to focus on discipline and balance, ensuring your portfolio captures meaningful growth while remaining resilient against short-term volatility.

We encourage you to review your Quarterly Portfolio Investment Report for your individual results and reach out to our office to schedule a review meeting if you would like to discuss your asset allocation, retirement timeline, or long-term financial planning goals.

Just as our communities build strength through shared effort and time, a successful investment strategy relies on staying the course through changing seasons. The fortitude of the American consumer and the adaptability of our businesses continue to provide a firm foundation for long-term growth. We remain committed to guiding your portfolio with that same steady, forward-looking optimism.

We have enhanced our quarterly client invoices to provide greater transparency and detail, allowing you to verify the calculations for our services manually if you choose. Please rest assured that our internal billing process remains exceptionally rigorous; we continue to verify every calculation using two independent software applications and audit those results to ensure accuracy. If you have any questions regarding your invoice details, please contact our office at (970) 403-1234. We are always happy to assist you and guide you through your calculations.

We remain deeply grateful for the trust you place in Intelligent Investment Management, LLP, and we welcome the opportunity to serve any family members or colleagues who could benefit from our disciplined investment philosophies.

Sincerely,

Intelligent Investment Management, LLP