Welcome to the Orion Portfolio Solutions portfolio recipe webinar for the month of October and this month our recipe is on the balanced portfolio. So I consider a balanced portfolio recipe in these uncertain times, and I would argue that all times of course are uncertain. Is often shown that balanced portfolios often result in the best investor experiences. And we have a couple great firms here today. First of all, we have one of the top brand name firms in Janice Henderson with approximately 300 billion under management, over 300 investment professionals. Janice started I believe in the 1960s, but the Henderson part started in the 1930s. So they've been around a while. And then of course we have one of the top boutique firms in Clark Capital founded in 1986. And in fact they were just awarded the asset manager of the year by Money Management Institute at Barons for asset managers between 10:00 and $50 billion. Now, before I introduce the speakers, a couple of different housekeeping notes. First of all, the format of this webinar is the same as always. Each strategist will speak for about 20 minutes and then we'll take Q&A for 20 minutes. Regarding Q&A in the lower right hand corner, you will see an area where you can submit questions. If for some reason we don't get to your question, we will follow up after the webinar. In the lower left hand corner, you will see resources for this webinar including presentation deck and all other kinds of goodies. And Speaking of resources of several hours, at the conclusion of this webinar, we'll be sending an e-mail with the replay and again the slide deck. Now As for our speakers, we have two great speakers. Today, first of all, it's Phil Wood from Janice Henderson, Global head of equity client portfolio managers over 20 years of experience and he is based in Denver. And then we also have Sean Clark from Clark Capital, Chief Investment Officer, nearly 30 years of experience based in Philadelphia where I've heard they're still playing baseball this time of year. So with that, I'm going to hand the ball off to Phil. Fill the floor is yours. Alright. Well, thank you Rusty and and good afternoon everyone. Thank you for taking the time to join this call. As Rusty said, over the next 20 minutes I'm going to give you a brief insight into the Janus Henderson balanced fund. Kind of talk to you about, you know, how we construct the portfolio, the team that manages the portfolio and review some of the performance characteristics of the portfolio that I think you'll be interested in learning about. I believe this presentation is going to be available to all participants in its full it in its entirety. So if I skip a couple slides, just know that you have access to these. Slides in the full deck. So Dale Sanderson is is as Rusty described you know a global financial institution with more than 2000 employees around the world, 24 offices where we do manage a wide range of different investment strategies. But this balanced fund is our largest investment strategy in AUM across the entire organization we've we've been quite fortunate to have. A number of different asset types come into the fund from qualified retirement assets to to wealth assets to insurance assets. So it's it's been well received across not only the United States, but we have a fair amount of business in this fund from offshore sources as well. So I'm really happy to kind of bring you a little bit more insight to it and and how we how we manage. So quickly looking at the at the balanced fund and and I'm not going to go into all the detail on this page, but I think really the points worth kind of highlighting are the fact that we're employing fundamental security selection across both the equity and the fixed income sleeve with a very dynamic asset allocation process around it. We we find that the fundamental research maybe is it makes us a little bit more unique in this multi asset balanced category that we have a team of equity and fixed income portfolio managers and analysts that are working daily on constructing both sleeves of the portfolio in concert with each other. We, we managed the equity sleeve in a high conviction large CAP growth orientation and we manage the fixed income sleeve to be that of the ballast of the portfolio. So to mitigate some of that downside risk that can be inherent in the equity markets and give the opportunity for the equity portfolio to provide that capital appreciation that we're looking for over a long period of time. On the right hand side of the page, just a few characteristics on how we're managing it. The asset allocation range on the equity side is can be anywhere as low as 35% to a high of 65% equity. So conversely that range on the fixed income side is fixed income can be as high as 65% and as low as 35%. We consider cash as part of the fixed income allocation. Today we sit at about 52, well at the end of this September similar to today, we sit at about 52% equities. Contrast that to the end of last year December 2021 where we were about 64% equities and in June we were about 55% equities. So over the over the calendar year 2022, we've gotten a lot more cautious in our equity allocation between equity and fixed income. And we do manage within the fixed income sleeve. We manage treasuries. Corporate credits including investment grade and high yield, you can see here that our high yield allocation will not exceed more than 35% of the fixed income allocation. Today, that high of allocation sits about 4% of the fixed income allocation and so taking that weight considerably down as well. We're managing the duration of the fixed income portfolio in a range of ± 2 years to that of the index. The index is the US aggregate. Today we're at about .2 years short in our duration, so not a lot different than where the AG is today. Contrast that to where we were at the end of last year and we were about a year short duration in the fixed income sleep. So hopefully that kind of gives you a high level overview of what we're looking at in the portfolio. I'll go into more detail as I go through this deck, but you know, just. You know hang on and and I'll hopefully get you some some of the things that you're interested in learning about the team is here is is shown here 2 equity portfolio managers, 2 fixed income portfolio managers. Jeremiah Buckley has been with Janice Henderson since 1998. He joined the firm covering multiple equity strategies. I'm sorry multiple equity sectors as an analyst and so before he could become into the. Assistant Portfolio Manager, Co portfolio manager and portfolio manager roles. You really had to cut his teeth understanding the fundamental. Nuances across a number of different sectors that really benefit his role today as PM of this balance strategy. David Chong recently joined the group about a year and a half ago as assistant portfolio manager. David's been with the been with Janice Henderson since 2009. He he transitioned from the role of being head of our industrial sector team. So Derek David is following a similar path to what Jeremiah did in in learning his trade through fundamental analysis at the sector level and then bringing it to the portfolio level. Greg Willensky joined the organization in 2020, joining us after a long 20 plus year career. Managing multi sector fixed income portfolios. So Greg has been a great addition to the team a little over two years ago where he brings that very broad perspective of fixed income instruments and how they can be utilized in this portfolio. Mike Keogh joined in 2007, started off with the firm as a corporate credit analyst and Mike has then grown into this role as portfolio manager. What's important here is, is not only the the work of these four individuals but the support system that sits behind them. On the equity side, we have the central research team, which we build up through 7 research sectors, as we call them here at Janus Henderson. And there are 40 investment analysts sitting within that central research team that support Jeremiah and David and the fundamental work that they do. Similarly, on the fixed income side, there is a team of 34 fixed income analysts covering credit, securitized and quantitative analysis that helps them with the sector allocation. And duration management within the fixed income sleep, so a very robust group both on the PM and the equity analyst and fixed income analyst perspective that help really bring this on portfolio to life. What I would consider are some of the real hallmarks of this strategy is the collaboration that goes on between the portfolio managers. Sometimes what you find in a multi asset portfolio like this is that the ultimate portfolio manager is just combining different strategies into one and and not really thinking about how the two play off each other. And so this collaboration that goes on between the equity portfolio managers and the fixed income portfolio managers. Is of great value to how we position the portfolio depending on the economic and risk environment that we're in. So combining those insights of both across both the equity markets as well as the fixed income markets brings a very informed decision across sector allocation and risk profile for each of the each of the equity in the fixed income allocations. The the other, you know, one of the other strengths we think of this portfolio is the power of downside protection. I'm sure you all know and understand that protecting the downside in a volatile investment environment is the best way to create long-term wealth. And so this strategy is set up to do that and I'll show you some performance characteristics later on in this presentation that kind of helped demonstrate that. And then lastly, the nature of it being fundamentally driven, fundamentally driven not only on the equity side where you know we are managing the portfolio with with a growth bias, but also fundamentally driven on the fixed income side so that you know that bottom up security selection is what we strived to be the most consistent driver of the results within this portfolio. So stepping back a little bit and looking at the long term performance of the balanced fund, what we like to talk about in this chart is the S&P like return with half the volatility and that is really that is that is what we strive for day in and day out as we manage this portfolio and over the years we've been able to accomplish that. So you can see that looking back over the 30 year history that this fund has, we have produced a return similar to that of the S&P 500 with. With half the volatility and certainly a better return and less volatility than the Morningstar peer group, which is 50% to 70% equities. Quickly diving into the the process a little bit. It's this, you know as I've talked about it's kind of this collaboration that goes on between the equity of the fixed income teams in terms of how they build their allocations as well as the dynamic asset allocation that brings it all together. So on the equity construction side, you know we are fundamentally driven trying to find that differentiated view that our analysts have relative to that of the market consensus. You know, we're going to build the portfolio based on our. Conviction waiting. So you know those those equity securities that we have the highest conviction on maybe that we have the biggest differentiated view on is going to get a bigger weight in the equity allocation than some that maybe our thesis is going to take a little bit of time to play out. So the, the, the characteristics of the equity portfolio are basically going to be a growth bias, high return on invested capital. Growing free cash flow and it's a very key metric for us to to understand if a company is able to self fund its growth going forward. In good management teams. Uh, you know as of late, you know kind of you might ask how are we looking at the equity markets today given all the volatility and all the downside that we've seen. You know one of the things that we've doubled down on in terms of our analysis is understanding the the future sustainability of earnings and free cash flow, testing our model assumptions to understand you know a base bull and bear case and and kind of running a scenario analysis. To understand how that security valuation might react in those three different environments. On the fixed income, as I said earlier, we're, we're, we're designing the fixed income sleeve as a ballast to this portfolio and a ballast to the equity volatility that we can sometimes get. Obviously we got a lot of it so far this year, but the fixed income came is going to start off with a view on interest rate risk. And how do they want to position the portfolio along the curve. They're also then going to look at the credit risk and understand where credit risk spreads are going to be most rewarding and and build the portfolio off that framework. So utilizing treasuries, corporate credit, both investment grade and high yield and securitized products which could include mortgage-backed securities, asset backed securities, CMBS, CMO and tips are all kind of what. Go in to building the fixed income allocation and then lastly, it's bringing those two together in this dynamic asset allocation process where we as a team, the four portfolio managers and myself and another client portfolio manager on this strategy meet formally every Wednesday to talk about what is going on in our respective markets, where do we see on the best opportunity for capital appreciation. So it kind of refers to that competition. Their capital. So lastly on this page, when we talk about the equity and the fixed income construction and the asset allocation, certainly we have a lever to pull in terms of how much equities, how much fixed income do we want to have in the overall portfolio. So as I referred to earlier, today we're about 52% equities and 48% fixed income. But there's a second lever on the risk spectrum that we can look at and execute on and that is how much risk do we want to have in each of these sleeves, you know, do we want to bring down, say, the beta? In the equity sleeve because of the market environment, do we want to maybe take some of the cyclical exposure out of the equity sleeve and put it more into the non cyclical stocks to mitigate some of the risk that we're seeing in the fixed income market. Similarly on the fixed income side, you know we we can manage on the interest rate duration quite easily and we also managing the sector allocation so that whatever view we're taking on the equity construction part, we want to have a complementary view on the fixed income. Construction as well. And so that kind of gets to the second phase of this asset allocation process not only bringing together equity and fixed income, but how do we want to tailor each sleeve on those on, on on the risk appetite, you know the risk of environment that we're seeing today. I'm going to skip the next few slides, but kind of bring you to this slide to show you that today we're sitting. Approximately in the cautious category, 52% equities, 48% fixed income, you know there's a lot of factors that come into play to bring us down here. Certainly the the sticky inflation that we're seeing in the market today particularly in the services side of the CPI continues to be increasing month over month. the Fed funds rate is likely to go higher. Certainly the Fed is pretty much, you know the market is pretty much baked in a 75 basis point increase for the Fed. Uh, next week maybe followed by 50 basis point rise in December and then they've got a late January, early February meeting where I think the market is still a little suspect on what may happen there. So we could see a Fed fund rate somewhere up around 450 basis points before it's all said and done. So that's that's an impact to our asset allocation decision making. Looking at the equity markets, certainly earnings so far this quarter have come in fairly well. We look at the earnings reports every day, talk to management teams as they release their earnings and the earnings reports have come in fairly strong. But you know we think there's you know there's an opportunity for earnings revisions particularly in 2023 to maybe be coming down a little bit. And so we're we're concerned about maybe additional multiple contraction that we might find in the market as we head into 2023. And so our focus continues to be on quality businesses, those that maybe can withstand a market environment that is going to be a little bit more fraught with volatility than we'd like to see. And at this point in time, here is a long-term equity fixed allocation of the portfolio. I'm going back to 2005 and you can see that, you know it is a dynamic process that we are managing on the equity fixed allocation and also managing within the fixed income. Allocation, you know how we're, how we're dividing up that portfolio between credits securitized and and U.S. Treasuries. This is kind of the proof point to how all this adds value to the overall returns. When we when we do the our our our performance attribution and we look at the contribution from both security selection and from asset allocation. We've been able to contribute positively on both those, both those activities. So we're, we're, we're contributing you know we're picking the right securities both on the equity and the fixed income side to exceed that of the aggregate, the US aggregate index. And on the equity side our security selection relative to that of the S&P 500 has been positive to the portfolio as well. I talked about downside protection a little bit earlier on and and I think this is a chart that can kind of speak to that. When we look at the bar graphs in the middle of this page, you know it's it's fairly easy to see that when we have severe downturns in the market that the balance strategy has protected value, protected value to that of the of the S&P 500 as we're showing here. And you know we think this is really what we strive for you know we we we want all of our investors. The strategy would be long term investors to think long term to if they can be dollar cost averaging into the strategy into any strategy, it's always productive to wealth creation. And so you know anytime that we've seen big downturns in the market, they've typically been followed by some pretty good rebounds in the market as well. And so lastly just more evidence of the downside protection and how we think this is you know the the value proposition that we bring in this strategy. Unto you and your clients that we are going to see market volatility from time to time. 2022 is certainly a case in point for that. And while 2022 has certainly been a rough year from both the equity and the fixed income side. In terms of the performance numbers that we've seen out of both those parts of the market, you know we we anticipate that the fixed income market really isn't going to see rates go much higher. So we think a lot of that pain is over. And the equity markets really you know well maybe not have found the bottom yet. I think we're close to the bottom. And so I think there's a really good opportunity for these, for the, for the markets in general for in strategy like this to continue on our on our approach to helping clients build wealth. So let me stop there and and and turn it over to Sean who will probably take us into the next few slides. Great. Thanks, Phil. Want to hand it off here to you, Sean? I'm going to get it over here. Oops. There you go. It's all yours. All right. Rusty, thank you very much. It's great to be here. And it's going to be tough following Phil. Everybody, thank you for attending today. I know there's voting time can be difficult at some point, especially in these crazy markets. So. What I would. Really like to do is talk a little bit about who Clark Capital is. A little bit about our investment. Philosophy and then dive into the multi strategy suite of portfolios that that that you have access to. So when that said a little bit about Clark, who are we? We are a family and employee owned asset management firm based in Philadelphia, PA and we've been in business for just a little bit over 36 years. In fact. Every employee at Clark Capital is actually an owner of the firm and we made a very conscious decision several years ago. We purposefully gifted shares of stock on multiple occasions to every single employee over the past number of years. And you know, we we did this to celebrate hitting various milestones and to really foster an ownership mentality across the firm with every single employee and what we found. It has really helped. Thrive common alignment with our mission to serve advisors and to deliver asset management excellence across all aspects. Of our firm. Rusty, you teed me up really well for this. Thank you. We we, we've had the privilege of being recognized over the past number of years by our peers in the industry. For example, Rusty mentioned this last week. We won several awards from the Money Management Institute and we won the award for Distribution excellence for our focus on being dedicated and serving the independent financial advisors. We've actually won that award in two of the past three years. We also last week won the award as Rusty Stead for for the asset manager of the year and that is the third consecutive year that we took home that award. So pretty exciting for us here and for all the advisors that that that trust us to manage their client lines. In addition and you know what, maybe one of the things that I'm actually most proud of is being named one of the best places to work in Philadelphia for four consecutive years. And that's really meaningful to us because it really speaks to the culture that we have at Clark Capital. Now, just so you know, I don't mention the Institute or on Horn. That's not who I am. That's not what we're about. But I mentioned the highlight that everything we do starts with our mission, our investment philosophy and the people that we have here at Clark. Capital. Now our mission. Our mission is to partner with elite Independent Financial Advisors to deliver investment management excellence so that you all can in turn deliver that to your clients now as the CIO. I lead a team of over 25 investment professionals who are a couple things. They're deep, they're seasoned, and they're tenured. The average years of industry experience on the team is approaching 30 years. I've been doing what I do here at Clark Apple for just over 29 years, so I am the average number of years of experience of of the team. And each member of the team has been doing what they do. In their respective fields of specially for a long time and they've gotten quite good at it and we're benefactor, the advisors are a benefactor of that and most importantly the clients or benefactor of that. So we do have a deep knowledge base of experience on the team and. The team of investment professionals comes in daily with one thing on their mind and that is to deliver investment management success. Now our investment philosophy, you know from a very high level everything we do starts with our firms overriding investment philosophy. We're an active investment management firm and what we're striving to do is deliver portfolios that provide what I would call superior risk adjusted returns through a disciplined approach. Prochem process of being meaningfully diversified. Hacked Tical and opportunistic at the asset class and the security selection level. And third, manage the risk of the markets and since the risks, there's risk in the markets, therefore manage the risk embedded in the portfolios that we are managing for your clients. Now when I think about our approach and process to managing assets, I like to think of two strains of two strains of DNA that run through how the investment team manages portfolios. There's a bottom up approach and a top down driven approach. Now the bottom up approach drives our individual equity and fixed income portfolios. Here we're using fundamental analysis to construct and manage. Equity and bond portfolios, those portfolios are what I would describe as being core broad asset class exposed. Allocations. On the equity side, real quick, we're seeking to own good high quality companies that are undervalued and experience improving business momentum. And then within the fixed income portfolios, we're looking at managing 33 risks within. Fixed income duration risk, credit risk and liquidity risk. Now that's all I'm going to say about the bottom up approach. Because our focus of this time together is on our multi strategy suite of portfolios that are driven by that other strand of DNA, the top down approach that drives what I would call armore tactical and opportunistic strategies so. The top down approach again drives our tactical strategies where we have the ability to meaningfully tilt exposures and we can also broadly and effectively the risk portfolios in high risk market environments. It is a very disciplined that objective approach and it's a very quantitatively driven methodology. What we're trying, we're not what we're doing is we're not trying to to. Forecast trends, but rather we're allowing the price movements of the markets to determine the trends. And then we're adapting to new trends and themes as they emerge as they filter through our quantitative research process. Now, as I mentioned, these portfolios are designed to be tactical. Opportunistic and manage risk. Now the portfolios include fixed income, total return or alternative opportunity style opportunity, multi strategy which we're going to talk about global tactical and some other tactically oriented strategies. Now. Factor investing, it's really nothing new, right? I think investors know factors such as value growth. Quality, size and beta. Momentum or otherwise called relative momentum or actually what we like to call it relative strength, is another investing factor. Now Dartmouth Professor Ken French years ago did an exhaustive 80 year research study on factors and he discovered that momentum was the strongest and most durable. Factor in predicting future returns. There's a ton of academic research on the topic and we've contributed to that research by writing white papers on relative strength too. Now, we've been employing and utilizing a relative strength approach to managing portfolios across multiple asset classes since the early part of the 2000s, so quite. A long time. Now. When talking about relative strength, I like, to use an analogy. Inertia, right? Inertia says something in motion tends to stay in motion until some exogenous event happens. Now, same with relative investment trends. They tend to have some persistency. With this process, we're not trying to predict what the next trend is going to be, but rather we're letting the market do that for us with the understanding that trends will have some persistence through them. In statistical terms, that's called autocorrelation. What happens in one period affects what happens in subsequent periods. Become now, in essence. We're identifying the outperforming trends and allocating there using a disciplined quantitative and objective process that's very rigorously followed each and every day. Now, how do we use relative strength? It can be used and we use it as a risk on, risk off approach to investing and managing assets. It's also gives us a really good framework that tactically shift allocations in a meaningful way to impact portfolio decisions. It allows us to be agnostic on where performance is really coming from. Now for example, let's say in the US equity markets, right, we can really be agnostic as to whether the leadership is large cap, mid cap, small cap growth or value or minimum volatility. High beta etc. This process gives us the ability to identify that leadership objectively and then we can allocate accordingly. Now many advisers use our tactical top down relative strength driven strategies to complement a broad based core allocation. That's great, that's fine. We actually do the same thing in our multi asset class portfolios such as our total wealth. Solutions. Now let's spend a little bit of time. Now that we've gone through some background on the multi Strat or multi strategy suite of we're folios. So multi strategy are balanced portfolios. That we've been managing for over 15 years that blend our style opportunity and our tactical fixed income strategies together to deliver tactically allocated balanced portfolios across three risk based profiles. Ranging from 75% equity to 25% fixed. The most aggressive strategy, down to 25%, equity 75%. Fixed income. Now our disciplined, flexible and tactical approach to managing equity and fixed income exposures allows us to effectively balance risk while at the same time pursuing alpha. So the equity component? Of the multi Strat portfolio is a style rotation strategy. We're using the relative strength methodology to identify outperforming trends in the US major indices styles. Investment factors such as quality, minimum volatility, dividend payers, dividend growth, buybacks and other factor choices. In essence, what we're doing is. We're comparing the relative strength of each security. Compared to all the other choices in the universe. What this does is it allows us to rank the universe of securities from best all the way down to worst on a relative strength basis. And then the strategy. Then allocates to the top relative strength securities in which we would typically own about three to five equity based ETF's. It's a very active approach that seeks to position the equity portion of these portfolios for. Capital appreciation and it's also designed to adapt the changing themes as they occur and really therefore stay in tune with the direction. Of the markets. Now the fixed income component of the multi strategy suite of portfolios uses. Again, a relative strength approach to tackling managed fixed income sectors with the objective of outperforming the fixed income markets. Over a full credit cycle. Now the tactical approach blends our fixed income, total return and tactical investment grade strategies together to actively rotate across high yield debt. Investment grade corporate debt. U.S. Treasuries and cash and cash equivalents. How do we do this now? Quantitatively, we compare the relative strength of high yield bonds to treasuries. How do you balance the two bills? Investment grade? Corporate bonds? The treasuries? And T-bills and then treasuries to T-bills. We hit every potential combination in that universe. This allows us to rank again from best to worst, and then we allocate the fixed income. Portion of the portfolio is accordingly now currently. The fixed income portion of the portfolios has been in a risk off position Aiden cash equivalents since the end of August. Since we've been defensively positioned in cash equivalents just through yesterday. The high yield index is down about 3 1/2%, the Triple B investment grade Bond index is down 8%, and the seven to 10 year U.S. Treasury Index is lower by almost 8%. Now, we've said for years that given the risk of an overly indebted society, we are all the major developed economies around the world are back, along with very low interest rates. That being active and tactical and fixed income is probably now more important than ever before. We've been, we've said that for at least five years and here we are. So being defensively positioned recently has really reduced risk and added a level of alpha. Now here we see the allocations of each of the three multi strategy portfolios as of the end of the third quarter. Now the equity portfolios, the equity portion of the portfolio owned ETF's representing prompt U.S. equity exposure. And also minimum volatility. It's since rotated out of the minimum volatility in TF and added exposure to mid cap value and momentum exposure. Now this is a really good real time example of how the allocations shift overtime. As new trends emerged. The fixed income allocation consists of our two tactical bond funds again, each of which currently has a defensive position in cash. And cash equivalents? Now. Performance, right? Performance has been very solid over long periods of time. Again, we've been managing these strategies for over 15 years. Our investment philosophy is to deliver portfolios again that provides superior risk adjusted returns. By being three things, meaningfully diversified the goal and opportunistic at the asset class and security selection level and 3rd manage the risk. Here we have the the performance statistics on this slide for the multi strategy, 25% equity, 75% fixed income portfolio. We can see that a lot of those statistics are very compelling. It's not just here across the multi strategy suite of portfolios. We have consistently provided relative outperformance with less risk. And lower standard deviation. Positive alpha. Higher Sharpe ratios, much less downside capture. And they lower maximum drawdown historically than compared to their respective benchmarks. Down real quick, I'll just cycle through. The multi Strat 5050 portfolio as well as. Finally, we the 75% equity and 25% fixed income portfolio, so with that Rusty. By May, I'll turn it right back over to you. Awesome. Thanks, Sean. Well, housekeeping note again, we've got some questions that have come in. So on the lower right hand corner, submit some questions, we'll get to that in a moment. And when it comes to a portfolio recipe, there's a lot of different ways to play this. But in terms of kind of the two most popular risk targets of course are growth portfolios and growth and income portfolios. And as I click here through all the disclosure pages, which I'm sure everybody really fast in terms of growth portfolio growth. Big come portfolio, just a 5050 mix looking at the Janice Henderson balance strategy and mixing of some of the asset allocation strategies from Park Capital that Sean was talking about. There's a lot of different ways you can tweak this of course and this is sort of a nice base recipe blending these two firms. And by the way in terms of all our portfolio recipes, you can find them on the financial advisor success Hub. If you go to orionportfoliosolutions.com, you will find a resource drop down menu. If you go there, you'll find all kinds of goodies including. All of our portfolio recipes we've been doing now for I think it's been quite two years yet, but we've been doing them for quite a while. So let's go to some questions. And then the very first question I want to ask is really for both of you and that is first of all, we're all dealing with of course with incredible bearish sentiment by individual investors from financial advisors. Institutional investors are bearish. Now we did hear from Sean a little bit the obviously the relative strength is about a catalyst for increasing risk a little bit more, but I'd like to drill down to. What are the catalysts that will really have you increase your equity allocations even more? So Phil, what what would it take? You're currently closer to 50% equity allocation. What would it take to get closer to that 60% mark? I think it's a matter of, you know, the visibility that we're getting from company managements and how do they. Start to suggest to us what 2023 is going to look like for them. Certainly there's a lot of moving parts as as you say rusty within the market you know can can the Feds efforts to fight inflation and create enough demand destruction essentially to bring down inflation and and what is the impact of that if we can get a sense from company managements that they're weathering the storm fairly well. You know our our focus is on companies with very solid. Balance sheet. So we're believing that our companies are going to be able to weather the storm better than others, but nonetheless. The overall market isn't going to be overly impacted by the the Fed's efforts and ultimately we will. Find some sort of soft landing or some sort of shallow recession. Or or the the evidence of that to come is going to allow us to put more money into the equity market certainly you know last the last few years. The the ability for fixed income to contribute to the portfolio was was significantly diminished. You know with rates at the 10 year at 1 1/2% at the end of 2021 didn't provide a lot of opportunity for fixed income to contribute to the portfolio. Now with the 10 year at about 4:10 you know the the fixed income part of the portfolio is going to start adding more value to to the overall equation and so I think we can be patient in our. Equity allocation, not trying to time the bottom but to time our allocation, our additional allocation and equities to suggest that we see firmer footing ahead on the overall economic environment and the company's ability to navigate out of. It's Sean. What would it take to get more aggressive even in the in the Clark capital portfolios? Ross, I think it will be primarily driven by trend and trend improvement on a relative basis. Our credit based risk management models that drive a lot of our allocations that determine whether we're fully risk on or or defensive in whatever capacity that that is are still fairly. Not barely, but very negative on the immediate outlook for the markets and that doesn't mean that things can't, can't change. I I expect that they will, you know, when I look at the landscape right now. There's a bunch of macro catalysts over the next couple weeks, right? There's the CPI report that's coming. There's the, the next employment report, there's the Fed that meets next week. As Phil said, yeah, we, we, we agree too that they're going to raise raise rates by another 75 basis points next week. And then finally there's the, there's the midterm election that's right on the heels of of the Fed action. So there's a lot of catalysts that can move. This marked in One Direction or another, and when I take a step back and just think about where we are right now, we're in a midterm election year, historically speaking, looking at all the data dating back to 1934. There's about a 20% correction on average in a midterm election. Back too far off from what we've had so far this year, right. The silver lining to those corrections has been that the markets have usually responded very well and come out of those corrections slash midterm election bear markets with an average gain of about 47% on the S&P 500 from the low that's usually right in and around or before the midterm election through the high that the market makes in year three of of the presidential cycle which would be next year. So combining that with. As as pessimistic and bearish as investor sentiment is, it's not just individual investors. Rusty, you mentioned individual investors, institutional investors. One managers. There's just bearishness across. Every investor. We're in a very strong seasonal period and we actually think that, you know what, we're probably past the peak inflation. It may not come down as fast as people expect, but we think the Fed eventually is going to have to. Dialed back their aggressiveness. We think that those could provide catalysts, but at the end of the day, we're going to sit back and let our objective risk management models determine when we, when we start to increase our exposures. Those are great point just given the kind of a backdrop of so many negative expectations, the market often turns just when those expectations started a little bit better. And you're right, that was a good list of potential catalysts. You know what, Ryan, portfolio solutions, of course, we believe in diversification and we believe in diversification. Asset class but of course also by if less investment philosophy and style and strategy and this is a great example here. Janice Henderson has such an emphasis on security selection and bottom up. Obviously they still have top down factors at Clark Capital has that emphasis on relative strength kind of top down. Of course they have bottom up factors as well, but it's a really nice combination of the two. The next two questions are there are kind of individual to each of you. So first is going to come to fill and that is just a question regarding. For the year equity allocation range and the range again is between 35% equities to 65% equities. Your neutral is 60% equities and the question is why is it not the midpoint between 35 and 65, why is why is that the middle 50%, why is 60% sort of your your long term central tendency, could you explain that? Yeah, it's, it's a good question. You know our our central tendency is around 55 to 60% equities. Simply because you know what, we're trying to provide a smooth investment. It's as smooth as possible investment experience as we can for our clients. By getting so overweight equities or so overweight fixed income that they tend to dominate the overall performance of the portfolio. We do believe in the long term investment opportunities that the equity markets provide, but yet we want to provide that that experience that will keep investors invested because we know you know timing the market is an ultimately difficult thing to do, difficult for professionals investors like us to do, very difficult for the retail investor. To do as well. And so you know our our 65% top of equities, sometimes we'll get it up to 6667%, but we really don't go much further than that. So you know that's just where we find kind of the natural. Spot for this portfolio to sit in in our motion bullish expectations to be 65 somewhere between 65 and 70% while maintaining 5560 is neutral so. Hard question to answer, but I'm just trying to frame it up in terms of how we think about it on the team so that when you know when we see up upside opportunity we can go there. If we see very dramatic times in the market like the great financial crisis in O 8, like the beginning of the COVID pandemic and early 2020, we we have the opportunity to take that equity allocation down quite considerably to protect capital. So I hope that hope that answers the question. Excellent. Sean, this one's for you. And that is, of course, you're building ETF portfolios and you talk about how you bring in factor based ETFs or Smart Beta ETFs, whatever you want to call them. But the question is do you also use actively managed ETFs, equity ETFs? And again, we've seen that explosion of them come into the industry. And are you using actively managed ETFs? And if not, what would it take for you to start using them? Haha, that's a great question. So far, no, we have not used any active active equity ETF. We actually, yeah. We we prefer to really know the underlying. Index and exposures that our models are are basing the. Changes on, having comfort with. The indexes were the liquidity profile, knowing when the change is going to happen in the index constituents. So what we're doing is we're modeling each one of those. ETFs within our research universe and we do a a really exhaustive due diligence in terms of which ETF's fall are are going to be allowed into our universe from which the relative strength research is driven from. So right now it's just. You know index based and factor based equity ETF's across both US style you know are actually are are broader based research universe which drives a lot of other portfolios has about 300 ish different choices in it from U.S. equity indices to styles, factors, industries, sectors, regions around around the world. Currencies, commodities and and fixed income and right now we're not including any of any of the active based ETF's in that universe. Alright. The next question is for both of you and it's kind of related to a question that I'm getting a lot and I'm sure you are too, but it's back on fixed income and you both have already touched upon this. And again talking about fixed income, I think in terms of reputations for the firms, you know people don't know you very well. Some people might say, well Janice Henderson of course is an active equity shop, but of course you have really solid fixed income capabilities. One of my favorite fixed income managers years ago was was Janice. So definitely a big fan of the fixed income capabilities there and. Part No for high net worth tactical allocation, but your fixed income capabilities have been very strong as well. So given that backdrop, the question is that I'm getting a lot is again back on credit, particularly like high yield and it seems like it's getting really interesting where there are some people who are really, really scared of high yield and some people are starting to get really excited about high yield. So I kind of want to know from each of you, so your green light, red light on both of these, so green light, when do you like what do you need to see to? Really step on the gas to increase high yield exposure, credit exposure and what's the red light where you get back out of it, Phil want to give it to you first? Sure. So looking at credit spreads both on the IG and the high yield side, you know the the credit spread on the IG side right now is about 160 basis points which is a little above the long-term average. Long term average is about 153 basis points. So we don't see investment grade credit particularly cheap or expensive based on historical trends. Certainly when we look back at you know the GFC and O 8 and in in the pandemic. In 2020 where IG spreads got up to over 200 basis points then that was a much more compelling opportunity for those and and we took advantage of that in this portfolio with with high yield spreads today are about 550 basis points right around the long term average as well. So we look at both opportunistically, I mean within the high yield space within this portfolio we're only in Double B's what we're not going to go below double. These in the high yield space and typically those are rising stars that we think ultimately are going to work their way up into investment grade. So we're not taking a ton of credit risk in this portfolio Rusty, but today you know I think we're cautiously watching it. You know our corporate exposure in the fixed income allocation of this portfolio where it's upwards of 50% going back just to the summer of 2020, so just a little over. Two years ago, we're down to 20% today. So we've taken the opportunity to reduce our risk in that area, maintaining some exposure as it can be a performance driver and looking for all the same things that we want to see on the equity side that the economic environment is solidifying for us to maybe start getting back in where where we can be opportunistic on certain securities that we think offer good value in that particular whether it be investment grade or high yield. Excel. Shine. All right. Couple things. First and foremost, what would get us you know more aggressive within credit would be our credit based risk management models. Plain and simple. When they start to turn more positive, we will, we will act accordingly and redeploy. Was asked those those parts of the portfolio into whether it be high yield debt? Or uh investment grade corporate debt. That hasn't happened yet as I mentioned earlier. I would like to follow up on what Phil said about credit spreads. Totally agree, right. Credit spreads are not that different from long term averages right now. What that tells me is that what we've seen in fixed income, which has been a really, really difficult, challenging, worst year in fixed income and very, very long time has not really been driven by credit. Issues, it's been driven more by interest rate or or or or duration. So I think one of the things that's going to happen. Is that when the Fed? I hate to use the word pivot or pause when they, when they, when they adjust. I think that the interest rate stress is going to be relieved from the fixed income marketplace and I think we're going to have a a very good. A very good rebound there. Now we do follow credit spreads, but we don't invest solely based on credit spreads because something that's, let's say high heel. High yield can get very cheap in terms of credit spreads, meaning credit spreads blow out really far. But we know with trends there's inertia and persistence there. So something that sheep can get even cheaper. So we're aware of the credit spreads and and and what they say relative to historical precedent, we're really going to wait until the relative trends change to confirm that there's a change. Entrent. Yeah, with spreads that long term averages, Rusty, I guess it would suggest that the fixed income market is really not pricing in a deep recession at this point. They're pricing in a very, very shallow recession. And so if we start seeing spreads getting out to those extreme levels that I spoke about, then there's an opportunity to maybe start being a little bit more strategic and picking off some really good credits that have suffered from you know, the overall spread market volatility. So we're cautious in that area just because the market doesn't seem to be pricing in anything but just the continued saying. Well, guys, this has been a great conversation. We've only got a couple minutes left. Any closing comments, I'll give it to you first, Sean. All right. Rossi, First off, thank you for having me. Got a lot of fun and some very good information has been shared by both myself and Phil and you. I guess one word of wisdom. It's a difficult and challenging time right now for individual investors, I'm sure. I hear it. I talked to many financial advisors. Investors are scared right now, not knowing what to do. My recommendation is stay in front of them right now. Keep talking to them. Keep coaching and counseling them about where we are, not only in the cycle, but what's happened in the past when we've been at periods, you know, staring potentially at a recession. You know, the markets usually are very good at discounting the future and you know, I I can foresee. This time right now, a lot of bad news is likely already priced into the markets. So Iris, Phil, probably, you know if we do get a recession, it's probably in the neighborhood of a mile ish type recession if so, right? A lot of the bad news probably is already priced in. So have your clients stay the path, focus on the financial plan and stick to it. In the comments staying in front of clients, I have a hunch and I am a betting man that your Houston based clients are gonna get a lot of love from Clark capital like later this week maybe going down to Houston or maybe your Houston based clients will be in Philadelphia. Just a guess. But not really. Yeah, potentially for some fun baseball games. Let's go. Ohh, that was. I didn't even think about that. I'm just kidding. Phil. Any closing comments? Yeah. Thanks, rusty. Yeah, the market environment is as challenging as it's ever been, you know. And So what we have to do is stick to our, our investment discipline. You know, we continue to be focused on companies with consistent cash flows that in all economic environments can withstand what a potential economic downturn can bring to them. And so that also increases our focus on strong balance sheets. Equity multiples for the overall market or at the low end of recent history and bond yields are much higher than in recent history. And so you know like like Sean said I think maybe a lot of it's already priced into the market and I guess it goes back to the old you know adage the the harder you know the best time to invest is when it's the hardest time to invest and I think this the circumstances and the environment that we're looking at now might be one of those where that phrase. Really, really makes makes sense. Excellent. Well, thanks Phil and again thanks Sean. Next month our portfolio recipe will be on the diversified boutique firm portfolio recipes. So you can register now. Until then, thank you for your time and trust and Orion portfolio solutions and we will see you next month. Thank you. Thank you. _1732282492765