OHFGX Thoughts Entering July and Key Takeaways

• The OHFGX investment team entered July following an exceptionally strong second quarter for growth equities and AI infrastructure. The team remained constructive on the long-term capital-spending cycle.
• July proved an extreme style and factor rotation and single stock dispersion month rather than a broad market correction in the S&P500. The capitalization-weighted S&P 500 was nearly unchanged. Equal-weight U.S. equities outperformed as capital moved away from both semiconductor and momentum exposures toward more GARP (“Growth at a Reasonable Price”) Financials, Energy, Value, and defensive industries.
• The fund remained centered on AI infrastructure, semiconductor demand, optical networking, power generation, data-center cooling, industrial automation, and connectivity. July’s sharp technology downturn in the fastest growers, reinforced the importance of position sizing, diversification, and active risk management within a secular theme.
• The S&P 500 declined approximately -0.1% in July, the Nasdaq Composite fell -3.2%, and the Russell 2000 declined -3.1%. The Dow gained approximately +0.3%. The equal-weight S&P 500 rose +1.1%.
• Sector leadership changed materially from 2q26. Energy gained approximately +12.1% as oil prices rose, and Financials advanced about +6.2%. Information Technology fell approximately -8.0%. Investors took profits in semiconductor, hardware, and equipment industries following their powerful second-quarter gains. A large AI focused hedge fund, Situational Awareness, became distressed and was forced to liquidate near month end.
• The macro backdrop remained resilient but less supportive for long-duration assets as real interest rates rallied to new cycle highs in July.
• The Federal Reserve held interest rates steady. The 10-year Treasury yield rose 31 basis points to about 4.75%, led by an increase in real rates. Oil jumped +23.8%, reinforcing inflation concerns.

OHFGX Portfolio Actions and Positioning

• Long side: The team continued to emphasize businesses benefiting from durable AI infrastructure spending, including semiconductor equipment, optical communications, data-center networking, power management, cooling, and industrial automation. July’s rapid reversal in several previously strong technology industries increased focus on earnings quality and valuation discipline.
• Short side: The team continued to trade opportunistically around companies with weakening fundamentals, aggressive expectations, or deteriorating returns on invested capital. The broad rotation into lower-valuation and previously lagging industries created a mixed environment for short positions.
• Hedging program: The hedging program remained active as technology volatility increased and Treasury yields moved higher. Sector and index hedges were used to help mitigate concentrated exposure to AI-related industries, while covered-call activity were used to offset a portion of protection costs.

OHFGX Performance Discussion

July created a difficult backdrop for the Fund’s principal themes in high growth areas. The long-term outlook for AI infrastructure, optical communications, data-center equipment, electrical infrastructure, and power generation remained extremely constructive, however profit-taking, and some late month forced margin call selling in crowded trades, across semiconductor, hardware, storage, and electronic-component industries produced significant near-term volatility. Broader exposure to financial, energy, industrial, and defensive industries benefited from the month’s rotation. For Official July fund return and detailed attribution see https://www.morningstar.com/funds/xnas/ohfgx/performance

U.S. Stock Performance – Index and Sector Moves

 

Index / Asset	July 2026 Return / Bberg	Comment
S&P 500	-0.1%	Nearly flat; rotation beneath the headline index.
Nasdaq-100	-6.6%	Semiconductors and AI leveraged industries sold off
Nasdaq Composite	-3.2%	Momentum factors as well as Technology weakened.
Russell 2000	-3.1%	Small caps lagged despite better Value performance.
Dow Jones Industrial	+0.3%	Value exposure supported relative performance.
Communication Services	+1.0%	Modest gain despite uneven media performance.
Information Technology	-8.0%	Profit-taking in semis, hardware, storage, and equipment.
Health Care	+2.5%	Defensive participation and sector rotation supported gains.
Energy	+12.1%	WTI crude rose sharply on renewed Middle East tensions.

Source: Bloomberg

Bottom Line

July 2026 was a market-rotation month in which flat headline index performance obscured substantial movement and volatility beneath the surface. Single stock dispersion and volatility were near historic levels versus moderate S&P500 volatility.  Capital shifted away from YTD winners in semiconductor and momentum exposures toward Energy, Financials, Value, equal-weight equities, and selected defensive industries.

The U.S. economy remained resilient. Higher oil prices and reduced Federal Reserve forward guidance, pushed the 10-year Treasury yield to near 5%, increasing the discount-rate risk facing long-duration growth equities.

OHFGX remained focused on durable AI infrastructure and industrial modernization themes. The key question entering August is whether July represented healthy broadening or a durable pause in the AI-led cycle.

What Matters in August

• Whether the rotation away from semi’s and momentum continues or stabilizes after July’s sharp reset.
• The direction and level of the 10-year Treasury yield as they near levels that have historically pressured equity valuations.
• Federal Reserve communication at Jackson Hole and is the bias toward tighter policy.
• Oil prices, including their effect on inflation expectations and consumer spending.
• Second-quarter earnings revisions and the durability of hyperscaler capital-expenditure guidance.
• Market breadth and whether equal-weight equities continue to participate.

Sources Reviewed

• P. Morgan Asset Management, Review of Markets over the Second Quarter of 2026, published July 2026.
• DataTrek Research, July 2026 Global and U.S. Capital Markets Performance Review.
• YCharts, Monthly Market Wrap: July 2026, released August 4, 2026.
• Bloomberg index and market data as reproduced by J.P. Morgan Asset Management and DataTrek Research.
• Federal Reserve and U.S. Treasury market data as summarized by DataTrek Research and YCharts.
• BLS and economic data as summarized by YCharts.
• Morningstar OHFGX performance page.

 

 

Investors should consider the investment objectives, risks, and charges and expenses of the Fund before investing. The prospectus contains this and other information about the Fund and should be read carefully before investing. The prospectus may be obtained by clicking here or by calling (833) 549-4121.

 

RISK CONSIDERATIONS

All investments involve risks, and the Fund cannot guarantee that it will achieve its investment objective. An investment in the Fund is not insured or guaranteed by any government agency. The Fund’s returns and share price will fluctuate, and you may lose money by investing in the Fund. There is a risk that you could lose all or a portion of your investment in the Fund. The prices of equity securities change in response to many factors including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity.

The adviser’s judgments about the growth, value or potential appreciation of an investment may prove to be incorrect or fail to have the intended results, which could adversely impact the Fund’s performance and cause it to underperform relative to other funds with similar investment goals or relative to its benchmark, or not to achieve its investment goal.

The Portfolio may engage in frequent trading of securities to achieve its investment goal. Active trading may result in high portfolio turnover and correspondingly greater brokerage commissions and other transaction costs, which will be borne directly by the Portfolio and could affect your performance.

Convertible securities may be illiquid and may be required to convert at a time and at a price that is unfavorable to a Fund. A convertible security has characteristics of both equity and debt securities and, as a result, is exposed to risks that are typically associated with both types of securities. The market value of a convertible security tends to decline as interest rates increase but also tends to reflect changes in the market price of the common stock of the issuing company.

While hedging strategies can be very useful and inexpensive ways of reducing risk, they are sometimes ineffective due to unexpected changes in the market. Hedging also involves the risk that changes in the value of the related security will not match those of the instruments being hedged as expected, in which case any losses on the instruments being hedged may not be reduced.

Please refer to the prospectus for these and other important risks.

 

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