Overview: Changes Made To The Portfolio

Every quarter, Strategas rebalances the Policy Opportunities Portfolio to reflect the latest quarterly lobbying allocations made by S&P 500 companies. On May 15, 2024, the portfolio was rebalanced and reconstituted to reflect first quarter 2024 lobbying data.

First quarter rebalances are historically the largest of the four yearly rebalances for the strategy. On average, since POP’s inception in 2016, first quarter rebalances average 11.8 names coming in and out of the strategy. This quarter’s changes of ten companies exiting and ten companies entering the strategy fall short of that average, but still represent a high level of turnover for a single quarter.

We embrace turnover in the strategy because it means that the strategy, as it was designed to do, is realigning with the latest issues in Washington.

As to why this rebalance may have come in lighter than the average, one factor may be the coming November presidential election. We do not expect to see much in terms of major legislation in the coming six months as the House, Senate, and other policymakers focus on campaigning and the presidential race.

Additionally, the outcome of the election is difficult to predict at this point. The policies of the two major party candidates – President Biden and Former President Trump – differ in significant ways that will impact investors and companies alike. There are six major areas where see some of the biggest bifurcations in policy direction and biggest macro economic impact: 1) Trade; 2) Geopolitics; 3) Immigration; 4) Regulatory Environment; 5) Fiscal Policy; and 6) Tax Policy.

As such, companies may want to sit on dry powder for the time being so that they can better utilize those funds in the run-up to the election – or even following the election once the result becomes clear.

As a result of the current rebalance the strategy is net adding to its positions in Energy, Materials, and Information Technology. The strategy is net subtracting from its positions in Health Care and Industrials.

The largest weights of the strategy are Industrials at 24 percent, Health Care at 24 percent, and Information Technology at 16 percent. The strategy is overweight Industrials and Health Care relative to its benchmark – along with the Materials sector. Despite being the third highest weight in the strategy, Information Technology is the strategy’s largest underweight position relative to the S&P 500, followed by Financials.

Definitions:

The S&P 500^® is a stock market index tracking the stock performance of 500 of the largest companies listed on stock exchanges in the United States. The index includes 500 leading companies and covers approximately 80% of available market capitalization.

This communication was prepared by Strategas Asset Management, LLC ("we" or "us" or “our”). This communication represents our views as of 05/15/2024, which are subject to change, and are presented for illustrative purposes only. The information contained herein has been obtained from sources we believe to be reliable, but no guarantee of accuracy can be made. This communication is provided for informational purposes only and should not be construed as an offer, recommendation, nor solicitation to buy or sell any specific security, strategy, or investment product. This communication does not constitute, nor should it be regarded as, investment research or a research report or securities recommendation and it does not provide information reasonably sufficient upon which to base an investment decision. This is not a complete analysis of every material fact regarding any company, industry, or security. Additional analysis would be required to make an investment decision. This communication is not based on the investment objectives, strategies, goals, financial circumstances, needs or risk tolerance of any particular client and is not presented as suitable to any other particular client. Past performance does not guarantee future results. All investments carry some level of risk, including loss of principal.

Strategas Asset Management, LLC is an SEC Registered Investment Adviser affiliated with Strategas Securities, LLC, a broker-dealer and FINRA member firm, and an SEC Registered Investment Adviser. Both Strategas Asset Management, LLC and Strategas Securities, LLC are affiliated with Robert W. Baird & Co. Incorporated ("Baird"), a broker-dealer and FINRA member firm, and an SEC Registered Investment Adviser, although the firms conduct separate and distinct businesses.