September 4, 2025: We recommend the following change…

With the September FOMC meeting approaching, economic and labor weakness has become concerning enough that even hardliners on the Fed are embracing rate cuts.  In anticipation of this, we are implementing an intermediate-term bond position to lock in a near-4% yield on a longer-term basis.

Buy a 5% position in iShares iBonds Dec 2032 Term Treasury ETF (symbol: IBTM)

The fund provides access to a portfolio of U.S. Treasury bonds that mature between January and December of 2032.  This combines the defined maturity and characteristics of a bond with the benefits of ETF tradability. 

The position offers a profit opportunity if the Fed moves to more aggressive easing, especially if economic worries come to fruition. We believe this outcome will be increasingly likely over the coming months.

The Model Fund Portfolio now has a net “long” position of 62%.  Current holdings include 57% in quality equity ETFs, 5% in an intermediate Treasury ETF, and 38% cash. The cash portion of the Portfolio (38%) is held in short-term Treasurys or a money market fund to provide an attractive yield and defensive buffer.