Monthly Moves: Charting Our Strategies, April 2024

Clark Capital’s Economic Gauges

Clark Capital’s Bottom-Up, Fundamental Strategies

After two strong quarters, the S&P 500 Index declined -4.0% in April due to higher market valuation, rising employment costs and persistent inflation concerns. Equities retreated in April as higher interest rates across both U.S. Treasury and credit yield curves now present a competitive alternative to stocks. At this stage of the market cycle, factors such as free cash flow yield, ROE, and earnings growth tend to outperform prior to a Fed pivot.

The sell-off in rates that began in March accelerated in April as expectations for Fed rate cuts and lowering inflation diminished. Without a Federal Reserve meeting during the month, all eyes were on the economic data. Employment remained strong while every inflation indicator during the month came in higher than expected, pressuring duration while credit remained fairly stable.

Below are strategy updates from April:

Navigator® All Cap Core U.S. Equity
  • Navigator® All Cap is positioned with approximately 71.8% in large-cap stocks and the remainder in mid/small-cap companies and cash.
  • Albeit underweight to the benchmark, Information Technology remains the largest sector weight in the strategy at 23.6%.
  • During the month, to benefit from improving business fundamentals, we added a Canadian-American multinational drink and brewing company and a global media, marketing and corporate communications holding company.
  • We exited our position in a multinational telecommunications and media conglomerate.
Navigator® High Dividend Equity
  • Navigator® The portfolio is positioned with approximately 97.8% in developed countries with the remainder in cash. The United States is the largest country weight at 90.4% followed by Britain at 3.0% and Ireland at 1.7%.
  • Large-cap represents 90.8% of the portfolio with 7.0% in mid-cap and the remainder in cash.
  • Financials is the largest sector weight at 23.0% and slightly above the benchmark at 22.6%. The next three largest portfolio weights are Industrials, Healthcare, and Information Technology at 14.9%, 13.6%, and 9.8%, respectively.
  • During the month, we initiated a position in a manufacturer of computer graphics processors, chipsets, and related multimedia software.
  • We exited our position in an energy equipment manufacturing and services company, a multinational IT company, and a global supplier of paints, coatings, and specialty materials.
Navigator® International Equity ADR
  • Navigator® International Equity/ADR is positioned with 15.4% in emerging markets and the balance in developed economies and cash. Britain, Canada, China, Ireland, and Japan are the strategy’s largest country weights, all ranging between 7% and 18%.
  • ADR’s exposure to China is now 7.3% and is above its weighting in the All-Country World less US benchmark.
    Financials, Industrials, and Information Technology are our largest sector weights.
  • During the month, to benefit from improving business fundamentals, we added to existing positions in a Canadian energy company, a Spanish multinational financial services company, and a Japanese manufacturing company. We exited our position in a Brazilian metals and mining company.
Navigator® Taxable Fixed Income
  • Within the portfolio, the focus continued to be the same as it has been throughout the year. We continued to buy short maturity, higher yielding bonds, paired with higher quality longer maturity bonds.
  • The portfolio took advantage of these higher yields and the wider credit spreads within the bank sector in April.
  • The focus on increasing yields in names where there is limited credit risk should continue as we expect interest rates to remain higher for longer.
Navigator® Tax-Free Fixed Income
  •  Municipal bond issuance was robust in April as we expected and was driven by deferred issuance earlier this year as well as refunding’s taking place in taxable muni space. Overall, April’s supply was approximately $39 billion and up over 26% year over year.
  • Muni funds experienced net outflows in April through 4/24, as reported by the Investment Company Institute (ICI). This is a reversal from the previous month’s inflows but is in line with traditional muni market seasonal dynamics.
  • Many participants were expecting larger withdrawals, but retail investors seemed to have enough cash on hand.
  • Institutional customer selling was manageable at $1.14 billion average per day, versus 2024’s $1.05 billion average. The month was characterized by spikes in selling, and 2024’s high was set on 4/11 at $1.8 billion (Bloomberg data).

Clark Capital’s Top-Down, Quantitative Strategies

The S&P 500 advanced by over 28% in a 21-week rally from 10/27/23 to 3/28/24 in which there was not even a 2% correction. We do know that the markets are cyclical, and on average, the S&P 500 has experienced three 5% corrections a year, a 10% decline once a year, a 15% decline every 2 years, and a 20% or greater bear market every three years.

In April, the S&P 500 had a 5% drawdown into mid-month and as a result, seeds of fear were replanted with investor sentiment statistics turning pessimistic. During the correction, credit markets continued showing relative strength, even as interest rates rose.

Below are strategy updates from April:

Navigator® Alternative
  •  Managed futures and market neutral income performed well during a down month for equities, largely due to their low sensitivity to interest rates or, in the case of managed futures, their ability to short rates.
  • Long-short equity and options-based strategies lagged. Our precious metals positions enjoyed strong gains in April, and we took some profits in mid-April after a strong run.
  • We added positions in Technology, Private Credit, and Biotechnology during the month and reduced our positions in Infrastructure and MLPs.
Navigator® Fixed Income Total Return (MultiStrategy Fixed Income)
  • Credit markets continue their historical pattern of displaying relative strength during times of rising interest rates.
  • Spreads remain close to 3%, with very few signs of weakness. Cash is preferred as the defensive vehicle over Treasuries.
Navigator® Global Risk Management
  • According to our credit models, equities continue to look strong, and we expect that position to continue into May and June.
  • Whenever weakness within credit markets does develop, we expect to employ cash as the defensive vehicle over Treasuries.
  • Improved breadth and performance by value and small-cap stocks are also encouraging and make our risk-on positions more sustainable.
Navigator® Global Tactical
  • Our credit-based models indicate a healthy backdrop for risk assets, and we are encouraged by broader market participation that includes value and small-caps slightly more than the first quarter.
  • Our position in risk-on equities looks to be stable over the intermediate term. It also appears that U.S. stocks are losing relative performance vs. international equities, which we would view as a positive and overdue development.
Navigator® Sector Opportunity
  • Financials, Industrials, Energy, Telecommunications, and Homebuilders are our major positions.
  • Technology has fallen down the ranks and been reduced to only one position (internet). Healthcare, Consumer Staples, and Consumer Discretionary rank lowest; we would also note that Utilities have begun to rise and could become a part of the portfolio soon.
Navigator® Style Opportunity (MultiStrategy Equity)
  • The portfolio favors mid-cap growth stocks (mid-cap momentum, mid-cap quality), along with some large-cap growth (S&P 500 momentum, momentum factor), and a small position in a cashflow yield-based ETF.
  • Having said that, very few ETFs are making recent relative strength highs, so the market has provided few trend-based opportunities right now.
Navigator® U.S. Strategic Beta
  • We continue to slightly favor value stocks over growth and have a modest mid-cap and small-cap bias along with a position in minimum volatility.
  • If growth stocks continue to correct and become more deeply oversold, we would expect to move back towards a growth stock overweight.

The opinions referenced are as of the date of publication and are subject to change due to changes in the market or
economic conditions and may not necessarily come to pass. There is no guarantee of the future performance of any Clark
Capital investments portfolio. Material presented has been derived from sources considered to be reliable and has not been
independently verified by us or our personnel. Nothing herein should be construed as a solicitation, recommendation or an
offer to buy, sell or hold any securities, other investments or to adopt any investment strategy or strategies.
The “Economic Gauges” represent the firm’s expectations for the market, and how changes in the market will affect the
strategy, but are only projections which assume certain economic conditions and industry developments and are subject to
change without notice. For educational use only.

This information is not intended to serve as investment advice. This material is not intended to be relied upon as a forecast or
research. The investment or strategy discussed may not be suitable for all investors. Investors must make their own decisions
based on their specific investment objectives and financial circumstances. Past performance does not guarantee future

Fixed income securities are subject to certain risks including, but not limited to: interest rate (changes in interest rates may
cause a decline in market value of an investment), credit, payment, call (some bonds allow the issuer to call a bond for
redemption before it matures), and extension (principal repayments may not occur as quickly as anticipated, causing the
expected maturity of a security to increase).

Equity securities are subject to price fluctuation and possible loss of principal. Stock markets tend to move in cycles, with
periods of rising prices and periods of falling prices. Certain investment strategies tend to increase the total risk of an investment
(relative to the broader market). Strategies that concentrate their investments in limited sectors are more vulnerable to
adverse market, economic, regulatory, political, or other developments affecting those sectors. Treasury yield is the return on
investment, expressed as a percentage, on the U.S. government’s debt obligations. Looked at another way, the Treasury yield
is the effective interest rate that the U.S. government pays to borrow money for different lengths of time.

References to market or composite indices, benchmarks or other measures of relative market performance over a specified
period of time (each, an “index”) are provided for your information only. Reference to an index does not imply that the
portfolio will achieve returns, volatility or other results similar to that index. The composition of the index may not reflect the
manner in which a portfolio is constructed in relation to expected or achieved returns, portfolio guidelines, restrictions, sectors,
correlations, concentrations, volatility or tracking error targets, all of which are subject to change. Investors cannot invest
directly in an index.

The 10-year Treasury note is a debt obligation issued by the United States government with a maturity of 10 years upon initial

The Standard and Poor’s 500, or simply the S&P 500, is a stock market index tracking the stock performance of 500 large
companies listed on stock exchanges in the United States.

The Russell 1000 Index is a stock market index that tracks the highest-ranking 1,000 stocks in the Russell 3000 Index, which
represent about 93% of the total market capitalization of that index.

Non-investment-grade debt securities (high-yield/junk bonds) may be subject to greater market fluctuations, risk of default
or loss of income and principal than higher-rated securities.

International Securities means securities listed on a foreign stock exchange and includes, but is not limited to stocks, shares,
bonds, debentures or other debt securities, notes, rights, units, options and any other instruments representing rights to
receive, purchase or subscribe for same.

This document may contain certain information that constitutes forward-looking statements which can be identified by the
use of forward-looking terminology such as “may,” “expect,” “will,” “hope,” “forecast,” “intend,” “target,” “believe,” and/or comparable
terminology (or the negative thereof). Forward looking statements cannot be guaranteed. No assurance, representation,
or warranty is made by any person that any of Clark Capital’s assumptions, expectations, objectives, and/or goals will be
achieved. Nothing contained in this document may be relied upon as a guarantee, promise, assurance, or representation as
to the future.

Clark Capital utilizes a proprietary investment model to assist with the construction of the strategy and to assist with making
investment decisions. Investments selected using this process may perform differently than expected as a result of the
factors used in the model, the weight placed on each factor, and changes from the factors’ historical trends. There is no
guarantee that Clark Capital’s use of a model will result in effective investment decisions.

Clark Capital Management Group, Inc. is an investment adviser registered with the U.S. Securities and Exchange Commission.
Registration does not imply a certain level of skill or training. More information about Clark Capital’s advisory services and
fees can be found in its Form ADV which is available upon request. CCM-1188


K. Sean Clark, CFA®
EVP, Chief Investment Officer