Inspire Portfolio Strategy Insights

Global & Select Strategy Performance

1. The Global (ETF-centric) strategies underperformed their secular benchmarks for the quarter, while the Select underperformed by a lesser margin. Over the trailing 12-month period, both our Select and Global strategies posted strong absolute results, ranging from 5.64% on the conservative side to 16.07% in the all-equity strategies. The Global strategies and the Select strategies both outperformed their respective blended benchmarks over the past year.    
2. On the equity side, our strategies underperformed the MSCI World Index in the quarter. In our Global (ETF-centric) strategies, we experienced negative performance coming from BIBL (-6.53%), ISMD (-6.88%), PTL (-5.10%), and FDLS (-2.48%). This was coupled with positive performance coming from WWJD (+2.62%), which ended the quarter just ahead of the MSCI ACWI Index (+1.60%). In our Select models, stock selection within our international developed and emerging markets sleeves helped performance. In contrast, overweight allocations to U.S. mid and U.S. small were detrimental to performance even with the outperformance relative to their respective benchmarks. Over the trailing 12-month period, both the Global and Select strategies have outperformed or performed in line with their respective blended benchmarks, due to our overweight positioning in U.S. small-cap equities, as well as outperformance from individual holdings.      
3. On the fixed income side, the bond portion of the strategies outperformed the BC U.S. AGG in the quarter by 122 bps, with returns of -2.29% and -3.51% respectively. This was due primarily to IBD's shorter duration (4.0 versus 5.9 years) as Treasury yields moved higher across much of the yield curve amid persistent inflation concerns and a more hawkish Federal Reserve. Over the trailing 12 months, IBD posted a return of -0.58%, outperforming the BC AGG with a return of -1.84%.

Asset Class Model in the Spotlight: Inspire Emerging Markets

The Inspire Emerging Markets sleeve outperformed the MSCI Emerging Index during the quarter, returning 1.69% versus -0.37% for the benchmark. The outperformance was driven by both sector allocation and security selection. Sector positioning was helped primarily by the portfolio's relative exposure to Energy, Industrials, and Consumer Discretionary. Security selection within the sleeve was weakest in the Communications Services and Health Care sectors. Differences in country exposure, particularly the portfolio's allocations to the Philippines, South Korea and Brazil relative to the MSCI Emerging Index, also helped relative performance during the quarter. Over the trailing twelve months, the sleeve returned 28.07% versus 29.22% for the benchmark.

With the recent outperformance, we remain optimistic on the long-term outlook for emerging market equities. Compared to U.S. equities, emerging markets continue to trade at more attractive valuations while offering exposure to many world-class companies across a broad range of industries. We believe these characteristics provide an attractive opportunity for long-term investors. Within the sleeve, we continue to emphasize companies with attractive valuations and stronger Inspire Impact Scores that meet our values-based investment criteria. From an overall portfolio perspective, we believe maintaining a meaningful allocation to emerging market equities enhances diversification and positions the portfolio to benefit should market leadership continue to broaden beyond the narrow group of U.S. mega-cap stocks that has driven returns in recent years.

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Capital Market Returns

See quarterly review and commentary for more information

Inspire ETF Returns

See quarterly review and commentary for more information.

‍Disclosures

Advisory services are offered through Inspire Investing, LLC, a Registered Investment Adviser with the SEC. All expressions of opinion are subject to change without notice and are provided for informational purposes only. Nothing in this commentary should be construed as an offer, solicitation, recommendation, or endorsement of any particular security, strategy, or investment product. Investing involves risk, including the potential loss of principal. Please consult your financial advisor before making any investment decision.

Past performance is not indicative of future results. All performance figures referenced herein are historical and may not reflect current or future market conditions. Actual investor outcomes may vary. There is no assurance that any investment strategy will achieve its objectives or avoid losses.

Inspire Investing, LLC serves as the investment adviser to certain proprietary ETFs used in Inspire portfolios. Inspire receives management fees from these ETFs, creating a potential conflict of interest. Inspire seeks to mitigate this conflict through policies and procedures that ensure recommendations are made in clients’ best interests and consistent with their unique goals and risk profiles. Additional details can be found in Inspire’s Form ADV Part 2A.

Information and data referenced in this commentary may be obtained from third-party sources believed to be reliable, including Bloomberg and MSCI, but Inspire makes no representation as to their accuracy or completeness. All trademarks and service marks are the property of their respective owners.

Certain statements may include forward-looking information based on current beliefs, expectations, and assumptions. These statements are not guarantees of future performance and involve known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially. Inspire undertakes no obligation to update or revise any forward-looking statements.