May 2025 reminded investors why we stay invested — not reactive. U.S. markets delivered across the board: the S&P 500 jumped 6.3%, the Nasdaq 100 surged 9.2%, and even international stocks rose nearly 5%. This rebound followed a shaky April and was fueled by renewed confidence in tech, cooling inflation data, and signs that the Fed may be close to done with rate hikes.
But we also saw rate volatility and geopolitical concerns persist. Interest rates rose, dragging down some bond categories, while floating-rate and high-yield strategies outperformed. As always, headlines shifted, but our approach didn’t.
At BGH, we don’t trade noise. We follow a disciplined, rules-based process that filters through the clutter to focus on what matters: risk-adjusted performance, ranking momentum, and fund quality. Our portfolios are updated monthly — but sometime, we stay put.
What Changed This Month?
Just one meaningful adjustment.
In our taxable equity portfolio, we removed a dividend fund (recently downgraded to Sell) and replaced it with a higher-ranked international value fund. The goal wasn’t to chase returns — it was to stay aligned with our process. The new fund strengthens our diversification while maintaining a tax-aware tilt.
Everything else held steady. Most of our current positions are strong, recently added, and still within our minimum holding period. Unless something is clearly broken or outclassed, we don’t touch it.
How We’re Invested Now
The BGH portfolios continue to emphasize balance and durability:
• Equity: We’re tilted toward quality growth and global diversification. Think momentum strategies, small-cap value, and smartly constructed U.S. and international ETFs.
• Fixed Income: We’re favoring inflation-protected funds, short-duration strategies, and tactical bond funds that respond to macro shifts without overreacting.
Each portfolio holds a maximum of five or six funds. We don’t force diversification — we earn it through precision.
Why So Few Changes?
Because turnover is the enemy of compounding. We aim to hold funds for at least three months (and often much longer) unless we see:
• A major downgrade
• Clear sustained underperformance
• Or a stronger, ranked alternative in the same category
This month, just one fund met those criteria. Everything else stays the course.
Looking Ahead
June may bring new surprises — jobs data, rate decisions, or political noise. That’s fine. The BGH model isn’t built to anticipate headlines. It’s built to adapt, methodically and unemotionally, as the data evolves.
We’ll be back in July with a fresh scan. Until then: stay invested, stay selective, and trust the process.
Guillaume Decalf
CEO, Blue Grasshopper