Hello, this is David Spangler, portfolio manager of the model portfolios. Today we're going to talk about some trades to SELECT models.

Within the model portfolios, our long-term strategic preferences and positioning is to be overweight equity, overweight domestic, and within domestic, overweight large caps and technology. Also, too, we're underweight international, and in international, underweight developed, and Europe in particular. These strategic positionings over the years have proven successful. Today we're going to talk about some changes to these positionings. The overall theme is “broadening.”

Over the last several years, technology has performed very well, but it's also resulted in concentration and larger position sizes within the models. Recently, more cyclical areas within the markets have outperformed, including small caps, value, international. At the end of 2023, we reviewed reducing our large cap and technology overweights. We decided to keep those, and that proved successful. At the end of 2024, we also took a look at it, decided to keep those positions, and that was also too successful, but less so than the prior year. In fact, last year, in 2025, only two of the Mag Seven stocks outperformed the S&P 500 and international outperformed.

This year, as we come into 2026, we have strong fiscal and financial supports. On the fiscal side, expansionary fiscal spending, substantial investment spending, material tax incentives, including lower taxes, lower tax withholding and higher tax refunds, deregulation and lower gas and oil prices, just to name a few areas. On the monetary side, we also have strong supports. We had three rate cuts at the end of 2024, three rate cuts at the end of 2025, for a total of 175 basis points of cuts to the Fed Funds rate. We expect one to two more cuts in 2026. This is all into a resilient economy with higher GDP forecasts.

International is also benefiting from fiscal and monetary supports as well. Emerging markets are showing stronger growth. Even developed markets are showing moderate growth. The investment thesis, however, is not about valuations. Valuations is generally a poor timing tool, but it is worth considering.

Over the years, large-cap tech has performed very well, but has also resulted in higher valuations within the U.S. Over the last couple of years, international has also rerated. International now is at or above its long-term historical valuations. What is different about international is that it is more cyclically oriented. International has more financials, materials, industrials, chemicals, as an example.

Within the model portfolios, we're moving in the direction of more cyclicality: more cyclical, value, and sensitivity to global growth. We remain overweight total equity. But within equity, we're selling large-cap tech and we're buying equal-weight S&P 100. Additionally, we're adding to international weight.

At the end, we will remain overweight equity, moderately overweight domestic, overweight large cap and underweight international. This retains our long-term strategic preferences to these areas but also recognizes strong global growth, stronger monetary and fiscal supports, and investor preferences for more cyclical areas within the market.

If you have any additional questions, please feel free to reach out to your Investment Consultants who are listed by region on thriventfunds.com. And thank you for joining me today.