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Over the course of 2025, the LOM Balanced Fund gained 10.85% as markets responded favorably to strong corporate earnings, a moderation of initially proposed tariff policies, and an accommodative stance by the Federal Reserve.
The fourth quarter highlighted continued consumer resilience despite persistent macroeconomic uncertainty, particularly surrounding U.S. fiscal and trade policy. Retail spending remained firm, supported by a relatively strong labor market and ongoing wage growth. Consumer-exposed companies broadly exceeded earnings expectations, with management teams citing sustained demand, improved inventory discipline, and easing input costs as key supports to margins. Performance was especially strong across travel, leisure, and discretionary sectors, indicating that household confidence remained intact even as borrowing costs remained elevated.
Equity markets performed well in 2025, with the S&P 500 advancing 16.4%. Investor sentiment improved as concerns that tariffs would derail the economic expansion receded, while central banks, including the Federal Reserve, shifted toward easier monetary policy. Looking ahead, technology-driven market leadership remains intact, with the most consequential structural theme continuing to be the capital-intensive expansion of artificial intelligence infrastructure. Investment in data centers and specialized semiconductors reached unprecedented levels in the second half of 2025, driving significant capital spending and rising energy demand.
During the quarter, the Federal Reserve implemented two rate cuts, lowering the target range to 3.50%–3.75%, despite data challenges stemming from a government shutdown. Chair Jerome Powell characterized this level as the “upper end of neutral,” signaling the potential for a pause in further easing into 2026. Tightening at the short end of the yield curve appears largely complete, with the curve continuing to normalize and market expectations now pricing in rate increases approximately 18 months forward. Corporate credit spreads tightened modestly overall, although select issuers experienced spread widening. Notably, CoreWeave and Oracle saw meaningful spread widening amid heightened investor scrutiny of AI-related return dynamics, particularly in the context of incremental debt issuance.
In this environment, we continue to favor a modest overweight allocation to equities while maintaining our strategy of opportunistically diversifying across attractive regions and sectors. At quarter-end, the Fund was allocated approximately 66.3% to equities and 26.1% to fixed income, 6.6% to cash reserves and 1.0% to alternative investments.
The information contained in this article is for information purposes only, and represent the views of the author. It is not intended as specific investment or financial advice, or a recommendation or solicitation to buy or sell any security. Any investments or strategies listed in this article may not be suitable for all investors. Past performance is not indicative of future performance, and as with any investment, prices may fluctuate. It is recommended that advice is sought from a qualified investment professional prior to implementing any financial plan. LOM has made every effort to ensure that the contents herein have been compiled from sources believed reliable, however LOM does not warrant the accuracy, adequacy, timeliness, or completeness of this information expressly disclaims liability for errors or omissions in this information.
