Return to flip book view

www.stjamesia.com St. James Investment Advisors 1-800-966-9343 Balanced Portfolio Objective The St. James Balanced Portfolio seeks to provide total return through a combination of equities and fixed income. The equity portion of the portfolio places an emphasis on selecting companies with above average dividends and those trading at reasonable discounts from our assessment of intrinsic value. The fixed income portion of the portfolio provides long-term growth of income and a moderate level of current income. Philosophy Absolute Return: We are absolute return investors and each investment must meet our strict fundamental research and macroeconomic criteria, not just offer opportunity relative to other alternatives. Long-term focus: We believe the best way to accomplish our goals is to accept short-term underperformance in exchange for long-term success. We expect to hold our investment positions unless fundamental valuation parameters change. We are not speculators and adhere to a strict value investment discipline. We are willing to hold cash. Why We Believe Dividends Are Important: • Over the long term, the return from dividends has been a significant contributor to the total returns produced by equity securities. According to Standard & Poor’s, dividends comprised an average of 35% of the monthly total return of the S&P 500 from 1926 to 2009. • Stocks with apparent high and sustainable dividend yields may be more resistant to a decline in price than lower yielding stocks because the stock is in effect “yield supported.” • There is an abundance of empirical evidence which suggests that portfolios consisting of high dividend yielding securities may produce attractive total returns over long measurement periods. Focus as bottom-up managers: Most of our energy goes to evaluating investment opportunities and trying to quantify potential downside scenarios. However, we do take some interest in the macro environment, as economic conditions profoundly affect the business models we are evaluating. Primary Portfolio Equity portion will be invested in dividend-paying equities and the fixed-income portion of the portfolio will utilize electronically traded funds or select fixed-income securities. St. James Investment Advisor We are professional portfolio managers Committed to Value Investing. St. James is an independent, fee-only, United States Securities and Exchange Commission registered investment advisory firm, providing customized portfolio management services to individuals and their financial advisors. Partnership Investing We invest our money alongside you as partners in our process. As managers we have significant amounts of our own capital invested in the strategy. Governing Principles We will primarily invest in blue chip companies with above-average dividend yields and an established history of paying dividends. The fixed income portfolio places an emphasis on investment grade quality bonds. We will treat your investment with St. James as if it were our own. We will remain significant investors with you in St. James Investment Advisors portfolios. Our decision-making process takes full advantage of individual insights within a partnership oriented culture. We are patient, long-term investors. We will discourage short-term speculators and market timers. We will communicate with our investment partners as candidly as possible. We think “benchmark risk” is part of investment life. Our firm’s goal is to earn good absolute investment returns over long periods of time without exposing our clients’ capital to undue risk. We do not think about any particular index when we make investment decisions.

All investing involves risk of loss, and the St. James Balanced Portfolio investment strategy could lose money over short or even long periods. The Investment Highlight position described above was randomly selected and was not selected based on performance. Views expressed regarding a particular company, security, industry, or market sector should not be considered an indication of trading intent of any investments managed by St. James Investment Advisors. These views should not be considered investment advice, nor should they be considered a recommendation to buy or sell. Data is based on a representative account selected because it has the least number of restrictions and best represents the implementation of the strategy. Presentations of composite performance are available upon request. Part 2 of form ADV is available upon request or at www.stjamesia.com. www.stjamesia.com St. James Investment Advisors 1-800-966-9343 Balanced Portfolio Quarter Ending June 30, 2025 | Commentary During its June 2025 meeting, the Federal Reserve decided to keep the federal funds rate unchanged at 4.25%–4.5%, as anticipated. However, the future is uncertain; the Federal Reserve's median forecast indicates it may implement two rate cuts in 2025, while seven members predict no changes and two expect only one cut. This cautious approach suggests that rates may remain stable for longer than the markets anticipate, potentially leading to a steeper yield curve and continued volatility in the bond market. Since early April, global markets have experienced increased volatility due to ongoing U.S. tariff announcements and reactions from trading partners. These developments have created a complex environment for businesses and investors, with the long-term effects of these trade policies likely to be considerable. At St. James, we view volatility as an opportunity. Our investment strategies currently prioritize sectors that are resilient to inflation and higher interest rates, focusing on “Things You Need” rather than “Things You Want.” We are committed to our disciplined approach, concentrating on value-oriented stocks to navigate these challenges. Our portfolios are carefully constructed with resilient companies chosen to preserve capital and thrive in this evolving market environment. We remain dedicated to delivering value and stability for our clients. During the last quarter the St. James Balanced Portfolio benefitted with exposure to: During the last quarter the St. James Balanced Portfolio exposure to the following was negative: The following are the individual contributors and detractors from the portfolio during the last quarter: As of quarter-end, the St. James Balanced Portfolio had the following compositions: Investment Highlight Charles Schwab Corp. (SCHW) is one of the largest retail-oriented financial services companies in the US, with $10.1 trillion in client assets across its brokerage, banking, asset- management, custody, financial advisory, and wealth- management businesses at year-end 2024. Schwab is a dominant player in registered investment advisor custody and has recently pushed into wealth management with robo-advisory, direct indexing, and other managed-investment solutions. Schwab has a market capitalization of $165.09 billion and realized 2024 revenue of $19.60 billion. • Financials • Technology • Industrials • Real Estate • Consumer Staples • Health Care Contributors: Detractors: UnitedHealth Group Inc. Charles Schwab Corp. Microsoft Corp. Prologis Inc. RTX Corp. PepsiCo Inc. Equities: 47.25% Fixed-Income: 51.00% Cash Equivalents: 1.75% Total: 100.00%