Perspective

Market Backdrop

The U.S. economy remains in expansion mode, though the transition between policy-driven stimulus and private-sector momentum is uneven. Deregulation and tax cuts are fostering a more dynamic business environment, even as labor data softens and consumer resilience moderates. Inflation, while no longer accelerating, remains sticky enough in our opinion to constrain the Federal Reserve’s (Fed) ability to cut interest rates aggressively. We expect monetary policy at Fed meetings in the next year to remain “up for grabs” with a possibility of only limited rate reductions, likely less than currently priced into futures, suggesting that long-duration yields may stay near current levels. Should this happen, it could continue to create a challenge for investors seeking diversification through fixed income.

Globally, economic divergence persists. Europe continues to face headwinds from the protracted Russia-Ukraine conflict and related energy vulnerabilities, while China-U.S. trade tensions remain a recurring source of uncertainty, particularly for the technology sector. These crosscurrents reinforce our view that volatility will remain slightly elevated as markets adjust to shifting policy and growth expectations.

Productivity and the Capital Expenditure (CapEx) Cycle

We remain constructive on equities supported by the ongoing capital investment boom tied to artificial intelligence and automation. We view this productivity uptrend as still early, perhaps the third or fourth inning, offering structural support for earnings growth. While there will eventually be a prove-it-or-lose-it moment for these high-flyers, that moment is likely several quarters, if not a year away. Sustained CapEx strength underpins valuation confidence, even as higher costs of capital make selectivity more important.

Valuation Discipline, Not Timing

Valuation remains an essential input, but not a reliable timing tool. Despite elevated multiples in certain segments, the persistence of profit growth in key secular sectors argues against broad multiple contraction. We continue to see investors focusing on relative value within durable growth trends rather than attempting to time macro inflection points.

Persistent Volatility and Concentrated Leadership

Unlike prior easing cycles, market leadership may remain more concentrated in sectors benefiting from secular innovation and productivity dynamics. Elevated uncertainty around policy, trade, and geopolitics suggests volatility will persist well into 2026, creating opportunities for strategies designed to balance participation and protection.

Conclusion

Our hedged equity portfolio continues to be structured to capture approximately 50%–80% of the S&P 500 Index’s upside with less than half its volatility. The fund combines full index exposure with an actively managed hedge overlay designed to limit downside and smooth returns across market cycles. This systematic, non-discretionary process is designed to enable consistent participation in equity markets while mitigating the impact of unexpected shocks.

Our approach remains grounded in total return objectives, disciplined risk control, and long-term participation. Against a backdrop of evolving policy, technological transformation, and persistent uncertainty, our Hedged Equity Fund remains focused on capturing opportunity while managing volatility. We are always invested, always hedged.

 

Active management. Dynamic protection. Real participation.

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RISKS & DISCLOSURES

Investors should carefully consider the investment objectives, risks, charges and expenses of the Fund. This and other important information about the Fund is contained in the prospectus which should be read carefully before investing and can be obtained by visiting funds.easterlyam.com or by calling 888-814-8180.

The Easterly funds are distributed by Easterly Securities LLC, member FINRA/SIPC. Easterly Investment Partners LLC is an affiliate of Easterly Securities LLC. Orange Investment Advisers, LLC and EAB Investment Group, LLC are not affiliated with Easterly Securities LLC.

Easterly Investment Partners LLC is the investment adviser to the Easterly mutual funds. Easterly Snow, Easterly Murphy, Easterly Ranger and Easterly ROC Municipals are investment teams of Easterly Investment Partners LLC, an SEC-registered investment adviser. EAB Investment Group LLC (d/b/a Easterly EAB), Orange Investment Advisors LLC (d/b/a Easterly Orange), and Lateral Investment Management are separate SEC-registered investment advisers that are strategic partners of Easterly. Each investment adviser’s Form ADV is available at www.sec.gov. Registration does not imply and should not be interpreted to imply any particular level of skill or expertise.

Not FDIC Insured–No Bank Guarantee–May Lose Value

IMPORTANT FUND RISK

There is no assurance that the Fund will achieve its investment objective. The Fund share price will fluctuate with changes in the market value of its Fund investments. Mutual Funds involve risk including possible loss of principal. Leveraging investments, by purchasing securities with borrowed money, is a speculative technique that increases investment risk while increasing investment opportunity. Derivatives may be volatile and some derivatives have the potential for loss that is greater than the Fund’s initial investment. If the Fund sells a put option, there is risk that the Fund may be required to buy the underlying investment at a disadvantageous price. If the Fund sells a call option, there is risk that the Fund may be required to sell the underlying investment at a disadvantageous price. Shares of ETF share many of the same risks as direct investments in common stocks or bonds. Because a large percentage of the Fund’s assets may be invested in a limited number of issuers, a change in the value of one or a few issuers’ securities will affect the value of the Fund more than would occur in a diversified fund.

Diversification does not guarantee a profit nor protect against loss in any market.

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