Strategy Review – June 2026
(Market Data as of 06/30/2026)
Monthly Strategy Commentary
By Kensington Asset Management Team
June brought a shift in tone after a scorching start to the second quarter. Easing geopolitical tension around a preliminary U.S.-Iran peace framework pulled energy prices lower and reduced concern over energy supply disruptions. At the same time, investors turned their focus toward inflation risk and a notably more hawkish Federal Reserve under new Chair Kevin Warsh, who struck a firm tone in his first meeting at the helm.
Market leadership broadened during the month. Large-cap technology paused after leading the advance in April and May, while small caps, cyclical sectors, and international equities took the lead and participation widened well beyond the mega-cap growth names that had driven recent returns. The commentary that follows details how each of our portfolio teams responded across credit, rates, and asset allocation.
Managed Income
Author: Kensington Asset Management PM Team
| 1 Month | 3 Month | YTD | 1 Year | 3 Year | Since Incep. | |
| Managed Income (Gross) | 0.17% | 2.82% | 2.57% | 6.74% | 6.87% | 8.21% |
| Managed Income (Net) | -0.08% | 2.06% | 1.06% | 3.59% | 3.71% | 5.01% |
| Bloomberg US Aggregate Bond Index | 0.24% | 0.67% | 0.62% | 3.79% | 4.16% | 2.94% |
Strategy inception: December 31, 2007. Returns greater than one year are annualized.
The Managed Income Strategy returned 0.17% gross (-0.08% net) for the month of June. Most asset classes within fixed income posted slight positive returns as Treasury yields remained rangebound. Economic fundamentals remain strong, which has kept credit spreads historically tight, particularly in the high yield sector. Investors are currently weighing reinflation risk against those strong fundamentals. Long-duration Treasuries outpaced other categories as investors rotated back into duration amid uncertainty surrounding the prolonged Iran conflict.
The Managed Income Strategy remained fully “Risk On” throughout the month, keeping its focus on U.S. High Yield with satellite positions in multisector assets. June 2026 marked the 14th consecutive full month of “Risk On” conditions for the portfolio.
Looking ahead, bond valuations may remain relatively expensive compared with historical averages. As a result, yield from the underlying holdings may remain an important component of Strategy returns in the short term.
Credit Opportunities
Author: Kensington Asset Management PM Team
| 1 Month | 3 Month | YTD | 1 Year | 3 Year | Since Incep. | |
| Credit Opportunities (Gross) | 0.24% | 0.65% | 0.35% | 3.35% | 5.33% | 5.24% |
| Credit Opportunities (Net) | -0.01% | -0.10% | -1.13% | 0.30% | 2.22% | 2.13% |
| Bloomberg US Aggregate Bond Index | 0.24% | 0.67% | 0.62% | 3.79% | 4.16% | 3.27% |
Strategy inception: August 31, 2022. Returns greater than one year are annualized.
The Credit Opportunities Strategy returned 0.24% gross (-0.01% net) for the month of June, a slight positive return broadly in line with its benchmark. The Strategy remained relatively conservatively positioned, seeking relatively low duration. At month end, the Strategy was approximately 75% invested in Treasuries of varying durations, with an emphasis on the shorter end of the curve. The remainder of the portfolio was invested in investment grade collateralized bonds.
With credit spreads remaining tight, there is inherently less room for price appreciation. However, the current rate environment continues to provide a meaningful source of income for investors.
At present, investors are focused on the path of inflation as well as the durability of future economic growth. In the short term, yield from the underlying holdings may represent a significant portion of the Strategy returns, although falling yields could contribute to some additional benefit.
Dynamic Allocation
Author: Kensington Asset Management PM Team
| 1 Month | 3 Month | YTD | 1 Year | 3 Year | Since Incep. | |
| Dynamic Allocation (Gross) | -3.69% | 15.38% | 14.32% | 27.10% | 20.30% | 17.52% |
| Dynamic Allocation (Net) | -3.93% | 14.53% | 12.63% | 23.35% | 16.74% | 14.04% |
| S&P 500 Index (TR) | -0.95% | 15.20% | 10.21% | 22.32% | 20.61% | 13.87% |
Strategy inception: December 31, 2014. Returns greater than one year are annualized.
The Dynamic Allocation Strategy returned -3.69% gross (-3.93% net) for the month of June. After a scorching start to the second quarter, the S&P 500 and Nasdaq Composite indices took a pause, turning in a negative month. Small cap stocks, represented by the Russell 2000, and the Dow Jones Industrial Average, by contrast, posted a strong June.
Market leadership broadened during the month as gains expanded beyond the big-tech and AI trade. Cyclical sectors such as industrials, financials, and consumer discretionary delivered strong results. As the big-tech trade took a pause, investors remained attentive to communications from the Federal Reserve. Newly minted Fed Chair Kevin Warsh struck a hawkish tone during his first meeting at the helm, referencing the Federal Open Market Committee’s “unambiguous and unanimous” resolve to tame inflation.
After beginning June in a “Risk On” stance, the Dynamic Growth model moved the Strategy to a “Risk Off” stance in the final week of the month. This move, which snapped a 12-week “Risk On” streak, was driven by expanding volatility and a loss of momentum among large cap stocks. As a result, Dynamic Allocation ends the quarter in a mixture of cash equivalents and short-duration fixed income.
Active Advantage
Author: Kensington Asset Management PM Team
| 1 Month | 3 Month | YTD | 1 Year | 3 Year | Since Incep. | |
| Active Advantage (Gross) | -1.09% | 11.05% | 9.98% | 17.50% | 13.40% | 7.29% |
| Active Advantage (Net) | -1.33% | 10.23% | 8.36% | 14.03% | 10.05% | 4.12% |
| S&P 500 / Bloomberg US Agg 50/50 Blend | -0.36% | 7.85% | 5.49% | 12.90% | 12.27% | 6.21% |
Strategy inception: December 31, 2021. Returns greater than one year are annualized.
The Active Advantage Strategy returned -1.09% gross (-1.33% net) for the month of June, a negative return attributable mainly to core equity positioning. The Strategy remained fully invested, continuing to hold a balanced mix of equities and fixed income, with the fixed income positions offsetting a portion of those losses during the month.
The international positioning, which comprises approximately 15% of the portfolio, outperformed during the month.
At the end of the month, the Strategy rebalanced, trimming its Nasdaq exposure in favor of high dividend stocks and fixed income. This rotation away from the big-tech trade mirrors market activity during the month. Active Advantage is currently fully invested and may increase equity exposure if large cap growth trends improve.
Defender
Author: Elio Chiarelli, PhD, AIF, Lead Portfolio Manager, Liquid Strategies
| 1 Month | 3 Month | YTD | 1 Year | 3 Year | Since Incep. | |
| Defender (Gross) | -2.01% | 4.24% | 10.25% | 20.14% | 11.44% | 11.44% |
| Defender (Net) | -2.25% | 3.46% | 8.63% | 16.59% | 8.14% | 8.15% |
| Morningstar Global 60/40 Index | -0.71% | 9.08% | 6.87% | 14.21% | 12.75% | 13.63% |
Strategy inception: May 31, 2023. Returns greater than one year are annualized.
The Defender Strategy returned -2.01% gross (-2.25% net) for the month of June. June presented a more challenging environment for risk assets as investors balanced easing geopolitical tension against a notably more hawkish Federal Reserve. While the announcement of a preliminary U.S.-Iran peace framework helped drive oil prices lower and reduced concerns surrounding energy supply disruptions, markets became increasingly focused on inflation risk and the possibility of additional monetary tightening. A late-month selloff in technology shares signaled a shift in investor sentiment away from speculative AI-related spending and toward companies capable of demonstrating tangible earnings growth and returns on capital. Large-cap U.S. equities finished the month modestly lower, while small-cap equities continued to lead, reflecting a broadening of market participation beyond the narrow group of mega-cap growth stocks that had driven returns in recent years.
Within the Defender Strategy, exposure to U.S. small-cap equities was a meaningful contributor as the asset class benefited from improving market breadth, attractive relative valuations, and growing confidence in the domestic economic backdrop. Japanese equities also contributed positively as corporate governance reforms, shareholder-friendly policies, and continued earnings resilience supported investor demand. The portfolio’s allocation to commodities continued to provide diversification benefits and exposure to real assets during a period in which inflation concerns remained elevated despite the decline in oil prices. Conversely, exposure to the Nasdaq-100 detracted as technology and AI-related stocks experienced profit-taking late in the month amid rising scrutiny of valuations and future growth expectations. The S&P 500 also faced modest headwinds, ending June slightly negative, while emerging markets experienced a temporary pullback despite remaining one of the strongest-performing asset classes on a year-to-date basis.
We continue to view the portfolio’s diversification across U.S. large-cap equities, innovative technology leaders, small-cap companies, international developed markets, emerging markets, and commodities as an important portfolio characteristic in an environment where leadership is becoming increasingly broad-based. The improving performance of small caps, international equities, and real assets suggests that investors are finding opportunities beyond traditional U.S. growth stocks, contributing to broader market participation.
Looking ahead, the Defender Strategy will continue to be managed according to its objective of seeking growth while utilizing active management, dynamic asset allocation, and disciplined risk oversight. Our investment approach seeks to build resilience by maintaining exposure to a diverse set of return drivers across varying market conditions. We believe this framework may help the Strategy to participate in long-term growth opportunities while striving to manage risk during periods of heightened uncertainty.
Hedged Premium Income
Author: Shawn Gibson, Chief Investment Officer, Lead Portfolio Manager, Liquid Strategies
| 1 Month | 3 Month | YTD | 1 Year | 3 Year | Since Incep. | |
| Hedged Premium Income (Gross) | -0.04% | 9.59% | 6.06% | 13.06% | — | 13.45% |
| Hedged Premium Income (Net) | -0.28% | 8.77% | 4.49% | 9.72% | — | 10.10% |
| S&P 500 Index (TR) | -0.95% | 15.20% | 10.21% | 22.32% | 20.61% | 19.73% |
Strategy inception: August 31, 2024. Returns greater than one year are annualized.
After strong returns in April and May, the S&P 500 finally retreated modestly in June, falling 0.95%. The Hedged Premium Income Strategy navigated the heightened volatility and finished the month essentially flat, returning -0.04%. At the June 18th expiration, we sold a new income-producing call spread, collecting 1.33% in new monthly premium.
The Index loss understates the volatility in the month, as there were two separate multi-day declines, one of which was over 5% and the other nearly 4%. The month was a reminder of how quickly risk sentiment can change, and that the parabolic move higher in April and May cannot continue forever.
For the Strategy, having the downside buffer finish the month just 5% below the market may provide some downside mitigation should market volatility continue into the third quarter. With the low end of the call spread finishing the month near the final Index level, the portfolio remains positioned in accordance with its intended risk/reward profile.
Disclaimers:
Investing involves risk, including loss of principal. Past performance does not guarantee future results. There is no guarantee any investment strategy and/or diversification will generate a profit or prevent a loss. Targeted distributions are not guaranteed.
*Gross returns do not include the deduction of transaction costs and are shown as supplemental information.
**Net performance values and statistics reflect the deduction of model fees of 3% as the highest possible fee that would be charged to an investor and may not reflect actual deducted fees.
This is for informational purposes only and is not a recommendation nor solicitation to buy, sell or invest in any investment product or strategy. Our materials may contain information deemed to be correct and appropriate at a given time but may not reflect our current views or opinions due to changing market conditions. No information provided should be viewed as or used as a substitute for individualized investment advice. An investor should consider the investment objectives, risks, charges, and expenses of the investment and the strategy carefully before investing.
Any indices and other financial benchmarks shown are provided for illustrative purposes only, are unmanaged, reflect reinvestment of income and dividends and do not reflect the impact of advisory fees. Investors cannot invest directly in an index. Comparisons to indexes have limitations because indexes have volatility and other material characteristics that may differ from a particular strategy such as the types of securities being substantially different.
Kensington Asset Management, LLC (“KAM”) relies on third party sources for some of its information that we believe is reliable. However, we make no representation, warranty, endorse or affirm as to its accuracy or completeness. The information provided is current as of the date of publication and may be subject to change. We are not responsible for updating this information to reflect any subsequent developments or events.
Certain information contained herein constitutes “forward-looking statements,” which can be identified using forward-looking terminology such as “may,” “will,” “should,” “expect,” “anticipate,” “project,” “estimate,” “intend,” “continue,” or “believe,” or the negatives thereof or other variations thereon or comparable terminology. Due to various risks and uncertainties, actual events, results, or actual performance may differ materially from those reflected or contemplated in such forward looking statements. Nothing contained herein may be relied upon as a guarantee, promise, assurance, or a representation as to the future.
Advisory services offered through Kensington Asset Management, LLC, Barton Oaks Plaza, Bldg II, 901 S Mopac Expy – Ste 225, Austin, TX 78746. Liquid Strategies, LLC, serves as a Sub Advisor for the Kensington Defender Strategy and investment adviser to Hedged Premium Income Strategy. Liquid Strategies, LLC is not affiliated with KAM. Xtollo Investment Partners, LLC (“XIP”) promotes KAM strategies and funds and receives compensation for these activities, which creates a conflict of interest. XIP is not a registered investment adviser or broker-dealer.
Important Disclosures | Glossary
Kensington Asset Management claims compliance with the Global Investment Performance Standards (GIPS®). For performance, GIPS compliance disclosures and important risks about the investment strategies, visit:
Managed Income Strategy | Credit Opportunities Strategy | Dynamic Allocation Strategy | Active Advantage Strategy | Defender Strategy
Hedged Premium Income Strategy
The Strategy invests in options that derive their performance from the performance of the S&P 500 Index. Selling (writing) and buying options are speculative activities and entail greater than ordinary investment risks. The Strategy’s use of put options can lead to losses because of adverse movements in the price or value of the underlying asset, which may be magnified by certain features of the options. When selling a put option, the Strategy will receive a premium; however, this premium may not be enough to offset a loss incurred by the Strategy if the price of the underlying asset is below the strike price by an amount equal to or greater than the premium. Purchased put options may expire worthless and the Strategy would lose the premium it paid for the option. The Strategy may lose significantly more than the premiums it receives in highly volatile market conditions.
The Strategy will invest in short term put options which are financial derivatives that give buyers the right, but not the obligation, to sell (put) an underlying asset at an agreed-upon price and date. The Strategy’s use of options may reduce the Strategy’s ability to profit from increases in the value of the underlying asset. The Strategy could experience a loss or increased volatility if its derivatives do not perform as anticipated or are not correlated with the performance of their underlying asset or if the Strategy is unable to purchase or liquidate a position.
KAM20260708
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Strategy Review – May 2026
March was shaped by a sharp escalation in US-Iran tensions, a surge in energy prices, and renewed concern that inflation could stay stickier than expected. The Federal Reserve again held rates steady, while higher oil prices and rising yields pressured traditional risk assets.
