December 31, 2025

All investors face capital-market risk. Managing that risk, evaluating opportunities in the context of an investor’s goals, and assessing specific investments efficiently requires broad, objective, close-to-the-capital-market thinking. An asset allocation framework does not need to be a black box that processes statistical variables and then spits out an investment plan. It should be a logical framework that lays out choices for investors. The First Quarter 2026 Allocation The LJE Allocation is a two-step process. First, our quantitative model estimates the probability that one asset class will outperform another. Second, we tilt the asset class benchmark allocation in direct proportion to the probability estimates as well as the share of the asset class market capitalization relative to the global liquid markets. Column 1 in Figure 2 shows the benchmark weight used in our global asset allocation process. A summary of the probability estimates is presented at the top, left corner of Figure 2. The top line of the probability table shows our estimate of a 44% likelihood of bonds outperforming U.S. equities. Hence, our model prescribes a decrease in the portfolio’s fixed income exposure relative to the benchmark. As a result of this, during the first quarter the allocation to fixed income declines to 34.38% relative to a 40% benchmark allocation while the equity allocation increases to 65.62% relative to a 60% equity benchmark allocation. The Year-to-Date performance. During 2025 the benchmark gained 12,08%, while the LJE Asset Allocation utilizing the ETFs has appreciated 12.68%. Hence for the year the LJE allocation outperformed its benchmark by sixty basis points.

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