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Municipal Fixed Income 2023 Outlook

January 13, 2023  |  14 Minute Read

Scott Diamond

Co-Head of Municipal Fixed Income, Goldman Sachs Asset Management

Scott Diamond

Sylvia Yeh

Co-Head of Municipal Fixed Income, Goldman Sachs Asset Management

Sylvia Yeh

David Alter

Head of Municipal Credit Research, Goldman Sachs Asset Management

David Alter

Bond investors suffered some of the largest losses in generations as inflation levels not seen in over 40 years led to unprecedented tightening by the Federal Reserve. The Fed implemented seventeen 25bp rate increases in 2022 ― catapulting the Fed Funds target rate from 0.25% to 4.50%.


With absolute yields near 15-year highs, we encourage investors to take advantage of the higher yield environment and unlock the power of carry to help drive returns over the next year.



Let Bonds Carry You to Better Returns

Investors spent much of 2022 watching their municipal portfolios suffer losses as AAA municipal yields rose multiple percentage points. Unsurprisingly, investors reacted by selling municipals at a historic pace. The silver lining to these negative returns are the elevated tax-free yields currently available to investors.


Three themes drove municipal performance:

  • Higher Global Yields ― Muni yields succumbed to central bank rate moves across the globe to combat persistent inflation.
  • Record Outflows ― Municipal bond funds experienced an almost uninterrupted string of negative fund flows ― breaking the annual outflow record.
  • Lower Primary Market Supply ― New money needs were dampened due to enduring federal aid monies and refinancing activity slowed considerably as rates rose. Taxable municipal issuance, which had been a refinancing tool over the last few years, was particularly impacted.


Where does this leave us heading into 2023?

  • Higher and Steadier Absolute Yields ― Yields at multi-decade highs create an opportunity to earn high levels of tax-free income through the purchase of highly-rated credits.
  • Continued Strength in High Grade Municipal Credit ― The majority of investment grade issuers are well positioned should the U.S. economy enter a recession in 2023.
  • Opportunities in Lower-Rated Credits ― Spreads widened in 2022 as the global economic picture darkened and mutual fund outflows created immense selling pressure. As the dust settles, we see a larger opportunity set in lower-rated credits.


Key Considerations


”The Fed moved aggressively in 2022 to get inflation under control. In 2023, the market will debate when the Fed will take a pause—with great attention to individual economic numbers each month. That has the potential to create volatility in bond markets—and that will create opportunity.”

- Scott Diamond, Co-Head AM Municipal Fixed Income



”First TINA, now BOB―A wise choice in our opinion given the sharp rise in yields presents the most attractive income and total return potential in more than a decade. Put simply, we believe 2023 is the year for investors to bring on bonds (BOB).”

- Sylvia Yeh, Co-Head AM Municipal Fixed Income



”Strong economic and job growth bolstered muni credit in 2022. We expect munis to continue to show strength into 2023, however revenue velocity is expected to moderate along with the economy. In the high yield space, we do see sector specific pressures continuing into 2023, which can also provide investment opportunities.” 

- David Alter, Head of AM Municipal Research



Positioning for an Elevated, but More Stable Yield Environment


2022 Review – Inflation, the Fed, and Volatility

Interest rates rose dramatically throughout 2022 as the 10-year Treasury yield jumped from a low of 1.50% to a high of 4.25%―averaging 2.95% for the year. 10-year AAA municipal yields followed a similar trajectory rising from a low of 1.05% to a high of 3.40%―averaging 2.50% for the year. Heightened volatility was driven by persistently high levels of inflation not seen in decades, compelling the Federal Reserve to embark on a historic monetary policy tightening campaign and pushing the Fed Funds Rate from 0.25% to 4.50%1 (As of December 14, 2022). Volatility became a consistent theme in the marketplace as investors continuously underestimated the magnitude and persistence of inflation as well as the hawkishness of the Fed’s response.



Exhibit 1: Treasury and AAA Muni 10-Year Yields


Source: Goldman Sachs Asset Management, Bloomberg, US Treasury Indices. As of December 31, 2022.



2023 Rates – Inflation vs. Economy Tug-of-War

Average market consensus calls for interest rates to stabilize as we head into 2023. 10-year Treasury yields ended the year around 3.90%. A great deal of variability exists with this forecasting as (1) there is debate around if and at what pace inflation returns to acceptable levels, (2) whether the U.S. enters a recession, and (3) how the Fed’s monetary policy will respond to economic data. This tug-of-war between views on inflation and economic data may be a persevering theme throughout the upcoming year. Barring a continued move higher in inflation, the market believes we are closer to the end, rather than the beginning, of the Fed rate hiking cycle. Looking ahead, the Fed Funds rate is expected to peak at 5% in mid-2023, with the market pricing in a possibility of rate cuts towards the end of the year.


Investment Strategy — Carry On

As we wrote in our 2022 Outlook, last year was a time for investors who had been underweight munis, short duration, and/or maintaining elevated cash levels to gradually get to a more neutral overall positioning as yields materially rose. We believe 2023 will be a year to maintain a neutral position and let the elevated yields purchased in 2022 work for investors in the form of carry. Investors may experience mid-single digit returns in 2023 as we begin the year with tax-free AAA muni yields between 2.50% and 3.50% and see the potential for a stable or potentially lower interest rate environment ahead. Further, given the continued strong credit backdrop, an appropriately sized allocation to lower-rated municipal credits may further enhance returns during the coming year. Lastly, 2022 was marked by significant negative returns across most fixed income asset classes, including municipals. If history is any guide, 2022’s negative performance may set municipal investors up for positive returns this year (see Exhibit 2).



Exhibit 2: Performance After Negative Return Years


Source: Bloomberg. As of December 31, 2022.



Strong Technicals Expected


Overall Supply – Should Remain Muted

Total municipal new issue supply volume for 2022 was the lowest since 2018 - 20% below 2021, and 20% below average market forecasts coming into the year. The main reasons for this decline were (1) remaining federal aid dollars lessened the need to borrow for new projects and (2) a plunge in refinancing activity. Tax-exempt refinancings became uneconomical for some issuers as AAA muni tax-exempt yields increased by 200bps and the 300bps increase in Treasury yields severely hampered issuance of taxable municipals for the purpose of refinancing previously issued tax exempt debt. Additionally, constant interest rate volatility and yield spikes caused by economic data releases and monetary policy actions added to issuers’ apprehension when deciding whether to come to the market. Due to this, the primary market was muted during weeks where there was a closely watched economic data point release or a Federal Reserve monetary policy meeting.


Absolute supply for 2022 amounted to $385BN―a notable decrease from the almost $500BN in annual supply seen during the previous two years. Average new issue supply forecasts for 2023 call for $425BN in supply―more in-line with 2022 volumes versus 2021 and 2020. Refinancing volume is expected to remain constrained as absolute yields are likely to stay elevated and thus limiting the amount of deals that would bring interest cost savings to issuers―a cause for decreased taxable supply.


Taxable Municipals

Taxable municipal issuance was the lowest since 2018 and more than 60% below 2020 and 2021 volumes due to the spike in Treasury yields, which made refinancings uneconomical for issuers. Taxable issuance is expected to make up a much lower percentage (<15%) of overall municipal primary market volumes in 2023 compared to previous years (2020/2021 >30%). As in previous years, investors should look to maximize after-tax yields by pivoting between tax exempt and taxable securities as valuations fluctuate.



Exhibit 3: Taxable Gross Issuance


Source: Bond Buyer. As of December 31, 2022.



Demand: Expecting a Reversal

Municipal mutual funds witnessed their largest ever annual outflows in 2022―over $140BN and shattered the previous record set in 2013. Fear of rising interest rates were seen as the main reason for the outflows; however, tax loss harvesting may also have played a significant role. Other municipal investment vehicles such as, Separately Managed Accounts (SMAs), ETFs, and individual bond buying generally saw positive momentum as yields peaked during the middle of the year and into the fall.


We believe elevated tax-free yields, coupled with a steady interest rate backdrop, will drive strong demand across all municipal investment vehicles in 2023. Mutual funds may benefit disproportionately given the level of withdrawals encountered and their asset base relative to the size of the overall municipal market. Demand from non-traditional buyers of municipal debt such as banks, insurance companies, and foreign investors will continue to be driven by relative valuations versus other fixed income asset classes.



Exhibit 4: Annual Muni Fund Flows


Source: Lipper, JP Morgan Markets. As of December 31, 2022.



Valuations: Potential for Outperformance

We believe that the combination of a stable interest rate environment, elevated absolute tax-free yields, muted new issue supply, increased demand, and continued strong credit fundamentals will lead municipals to outperform in 2023. Expected outperformance should lead to municipals trading at the tighter end of their historical valuations. One common measure of municipal valuations is the ratio of AAA tax-exempt municipal yields to comparable maturity Treasury yields. We would expect these ratios to be on the lower end versus recent history given the supportive technical backdrop.



Strong Fundamentals Will Continue to Support Credit


Credit Strength Remains with Headline Risk

Many states and local governments are heading into the 2023-24 budget season in a strong position. That said, there are some signs that 2023 may herald a change in direction. At this time, we expect any weakening in trends to be manageable.


Economic expansion, shown in the GDP growth below, started in 2020 and has only recently started to decelerate (exhibit 5). This growth, along with federal COVID related funds, contributed to multi-year revenue and expense expansion. States enjoyed healthy reserve growth (exhibit 6), however with the economy cooling, we are seeing a revenue-expense gap developing for 2023. If the Fed is ultimately successful, and the economy avoids a deep recession, we believe states and municipalities will power through on the back of those strong reserves.


Under these scenarios, the velocity of revenue expansion will moderate significantly, and municipalities may require “budgetary belt tightening” for the first time in many years. We anticipate headlines may start focusing on bloated budget gaps, weaker pension funding, higher OPEB contribution and ultimately some ratings pressure. We do not anticipate meaningful ratings changes but do expect to see a ratings environment that reflects the typical credit cycle.



Exhibit 5: U.S. GDP and State and Local Tax Receipts


Sources: Goldman Sachs Asset Management, US Bureau of Economic Analysis. As of December 31, 2022. “Quarterly State and Local Total Receipts” data is de-annualized.



Exhibit 6: State Total Receipts vs Spending Growth


Sources: Goldman Sachs Asset Management, US Bureau of Economic Analysis. As of December 31, 2022. “Quarterly State and Local Total Receipts” data is de-annualized.



Upgrades Continue with Some Areas of Concern

Upgrades continued to outpace downgrades through December. S&P upgraded 2.5 times as many issuers as downgrades. Moody's and Fitch have followed the same trend. It is worth noting that this trend has slowed over the last few months.



Exhibit 7: S&P Rating Changes


Sources: S&P Rating Changes as of December 30, 2022 - Favorable includes: Upgrades, Outlook/CreditWatch changes to Positive or to Stable, or removal of CreditWatch Unfavorable includes: Downgrades, Outlook/CreditWatch changes to Negative, or placed on CreditWatch. Goldman Sachs does not provide accounting, tax or legal advice. Please see additional disclosures at the end of this presentation. Economic and market forecasts presented herein are for informational purposes as of the date of December 31, 2021. There can be no assurance that the forecasts will be achieved. Please see additional disclosures at the end of this presentation. Past performance does not guarantee future results, which may vary.



Views on Sectors

We have been cautious investing in several sectors since the onset of the pandemic, including the higher education and health care sectors ― both of which have been impacted by weak revenue and increasing labor costs. Over the last few quarters, Moody's and S&P have placed these sectors on negative outlook citing similar concerns. That said, the risk/reward trade-off for some credits within those sectors stick out as yields have gone higher. In particular, large private universities with sizable endowments and hospital systems with strong cash reserves should benefit from relative credit rating stability and tend to be well positioned from a management perspective to navigate financial challenges.



High Yield Review


2022 — A Year in Review

High yield municipal bonds generated returns of -13.10%, more than 450bps worse than its investment grade (-8.53%) counterparts in 2022. Rising rates were the culprit for the longer duration asset classes’ relative underperformance as high yield credit fundamentals have generally held up well. First time municipal bond defaults were down 25% year-over-year.


While seemingly every sector is grappling with inflation-driven expense pressures, given the idiosyncratic risk inherent to high yield municipal bond credits, we are not anticipating an increase in systemic defaults in 2023. We do, however, expect the majority of distressed situations to generally be one-off in nature―disproportionately impacting project finance transactions which tend to be “equity light” and make up a small but risky subsegment of the municipal bond market.



Exhibit 8: First-Time Muni Defaults


Source: BofA Global Research, Bloomberg. As of December 30, 2022. Defaults make up 0.03% of the ~$4TN municipal market.



Healthcare Headwinds Remain

The staffing shortages and expense-related challenges that plagued hospitals and continuing care retirement community (CCRC) credits in 2022 are likely to continue to for at least a portion of 2023. The pace of rating downgrades and distressed situations in the healthcare space have begun to tick up as operating margins have been pressured and cash reserves ― previously bolstered by COVID-19 stimulus monies and investment market outperformance ― have eroded.


Issuers that took advantage of historically low borrowing costs to be overly acquisitive may find themselves “overly” stressed while those with experienced management teams and strong balance sheets should be better positioned to navigate the sector’s challenges. As yields have gapped higher and individual healthcare credit trajectories diverge, the potential to opportunistically invest in the sector has increased. Security selection within this space will be more critical than ever this coming year.



Opportunities in 2023

In addition to healthcare, we believe that there are a variety of areas that have the potential to offer an attractive risk/reward trade-off in high yield space.


We continue to be constructive on well-located projects in the special assessment sector despite higher mortgage rates and the recent run-up in home prices constraining affordability for new buyers. Home inventory levels remain low and the leverage incorporated into “dirt” bond transactions nowadays is materially lower than those that were originated prior to the Great Financial Crisis (2007-2008). MSA-backed tobacco bonds tend to offer elevated yields and should remain relatively muted from a credit standpoint in 2023 as higher-than-normal inflation should at least partially offset elevated domestic combustible cigarette consumption declines. Lastly, investors will be watching how much of the higher education sector manages to navigate its way through enrollment declines and endowment investment losses.



Municipals & ESG — A Natural Fit


This past year was filled with headlines regarding ESG Investing (Environmental, Social & Governance), dominated by the growing politicization of the acronym as well as concerns around energy security following conflicts abroad. Climate-related disasters continue to intensify, and in 2022 alone there have been 15 weather disaster events in the US with losses exceeding $1bn each, compared to the 1980-2021 annual average of only 7.7 events.2 One of the largest was hurricane Ian in Southwest Florida, which caused damages estimated north of $30bn.


Amidst these complicated topics, a couple of concrete themes emerged in sustainable finance within the municipal market, namely: continued strength in labeled issuance; investor scrutiny to avoid greenwashing, and increasing regulatory focus.


Green, Social and Sustainability Bonds

First and foremost, ESG-labeled issuance remained an important force in our market. Though nominal issuance of ESG bonds is down slightly compared to 2021, this primarily reflects the lower levels of aggregate issuance driven by the huge increase in rates in 2022. What is more interesting to reflect on is the percentage of issuance of these types of bonds, which has grown from 2% in 2018 to almost 11% by the end of 2022. Dealer expectations for issuance in 2023 range between $50-60bn, compared to ~$45bn in total ESG issuance this past year.


We, too, expect to see this trend continue, as investors and strategies aim to allocate more capital to bonds with environmentally and socially friendly projects.



Exhibit 9: Labeled Issuance


Sources: Labeled Issuance: Bloomberg. As of December 30, 2022. The economic and market forecasts presented herein are for informational purposes as of the date of this presentation. There can be no assurance that the forecasts will be achieved. Please see additional disclosures at the end of this presentation. Past performance does not guarantee future results, which may vary. The portfolio risk management process includes an effort to monitor and manage risk, but does not imply low risk.



Investor Expectations Increasing

Clients are growing more informed about the potential risks associated with investments across all markets and products, and the fear of greenwashing is no exception. Greenwashing refers to falsely marketing a project as environmentally friendly, often to lure in additional investor demand. As such, issuers have turned to seeking additional verification, as a ‘stamp of approval’ that projects are aligned with the intention of the label. We have seen municipal deals with second party opinions and third-party verifications increase from ~20% to almost 50% of labeled deals in the past four years.


These verifications typically compare a specific deal to one of a variety of industry frameworks, such as the ICMA (International Capital Markets Association) Green or Social Bond Principles, which offers guidance on qualifications recommended to attain a label. For example, in the green bond principles, there are four components outlined for issuers to consider – Use of Proceeds, Project Selection, Management of Proceeds, and Reporting.3 As an anecdote, in Q1 and again in Q3 of this year, verified deals outnumbered self-labeled deals, validating the anecdotal growth we have observed of these types of deals.4


Following the trend in Europe as well as in other fixed income markets, the municipal fixed income team expects to see verified bonds represent a growing percentage of the labeled market.



Increasing Regulatory Focus

Lastly, regulation comes with no surprise given the growing nature of “ESG” bonds and investor demand. This year, the MSRB (Municipal Securities Rulemaking Board) published a summary of the responses received in their Request-For-Information at the end of 2021. They noted the evolving nature of ESG practices, the challenges within the municipal market, and potential opportunities to improve transparency as the industry moves forward. Additionally, in May the SEC announced amendments to two rules, looking to both standardize disclosure and expand naming consistency of funds with ESG characteristics.


Final rule adoption is still pending, so all eyes are focused on this as we progress through 2023.

Let High Current Yields Carry Your Bond Portfolio


The Strategy for 2023

A higher and more normalized interest rate environment should be a prevalent theme as the Federal Reserve keeps the Fed Funds rate elevated to combat high levels of inflation.


Municipal investors can earn meaningful tax-free income at current levels. Favorable supply and demand technicals, a continued strong credit backdrop, and a historical propensity for positive rebounds after negative return years should be catalysts for municipal outperformance in the year ahead.


We see select opportunities in lower-rated credits as outflow driven spread widening and a risk-off environment has made some credit valuations more attractive.




Higher & Steadier Rates

As yields stay elevated, consider continuing to add exposure along the yield curve.



Supply & Demand

Supply is likely to come in much lower than in recent history as refinancing volumes slow. Demand should rise as tax-free yields remain elevated.



Credit Opportunities

Wider credit spreads driven by historic outflows, has created significant valuation dispersions. As a result, we see more lower-rated credit opportunities.








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1 Federal Funds Rate target upper bound. Source: Bloomberg. The economic and market forecasts presented herein are for informational purposes as of the date of this presentation. There can be no assurance that the forecasts will be achieved. Please see additional disclosures at the end of this presentation. Past performance does not guarantee future results, which may vary.

2 (National Oceanic and Atmospheric Administration), as of October 11, 2022.


4 Bloomberg, BofA Global Research, NIC MAP Data.

The views expressed herein are as of December 31, 2022 and subject to change in the future. Individual portfolio management teams for Goldman Sachs Asset Management may have views and opinions and/or make investment decisions that, in certain instances, may not always be consistent with the views and opinions expressed herein.

Views and opinions expressed are for informational purposes only and do not constitute a recommendation by Goldman Sachs Asset Management to buy, sell, or hold any security, they should not be construed as investment advice.

Glossary of Terms

Volatility is the manner in which the price of an investment moves up and down. If prices fluctuate dramatically over a short period of time, a market is said to be highly volatile. Price/earnings (PE) ration is a gauge of how expensive a stock is. The higher the P/E ratio, the more the market is willing to pay for each pound of annual earnings. A bond with a credit rating of BBB or above from an independent rating service such as Standard and Poor’s. Drawdown is the peak-to-trough decline during a specific recorded period of an investment security. Tail risk arises when the possibility that an investment will move more than three standard deviations from the mean is greater than what is shown by a normal distribution. Bull market is a term used to describe a market in which prices are rising or expected to rise. G10, or Group of Ten, is a group of eleven industrial countries which co-operate on economic matters. 

Over-levered is a term used to describe a company which has taken on too much debt.

Risk Considerations

Municipal Securities are subject to credit/default risk, interest rate risk and certain additional risks. High-yield, lower-rated securities involve greater price volatility and present greater credit risks than higher-rated fixed income securities. Investments in fixed-income securities are subject to credit and interest rate risks. Bond prices fluctuate inversely to changes in interest rates. Therefore, a general rise in interest rates can result in the decline in the bond’s price. Credit risk is the risk that an issuer will default on payments of interest and principal. All fixed income investments may be worth less than their original cost upon redemption or maturity. Income from municipal securities is generally free from federal taxes and state taxes for residents of the issuing state. While the interest income is tax-free, capital gains, if any, will be subject to taxes. Income for some investors may be subject to the federal Alternative Minimum Tax (AMT).

All investments involve risk including possible loss of principal. Individual asset classes involve unique risks. Bonds and fixed income investing are subject to interest rate risk. When interest rates rise, bond prices fall. Equity securities are more volatile than bonds and greater risks. Small cap company stocks involve greater risks than those customarily associated with larger companies. International securities entail special risks such as currency, political, economic, and market risks. These risks are heightened in emerging markets securities which may be less liquid and more volatile.

These risks should be fully evaluated before making an investment decision.



Although certain information has been obtained from sources believed to be reliable, we do not guarantee its accuracy, completeness or fairness. We have relied upon and assumed without independent verification, the accuracy and completeness of all information available from public sources. Past performance does not guarantee future results, which may vary. The value of investments and the income derived from investments will fluctuate and can go down as well as up. A loss of principal may occur.

Goldman Sachs does not provide legal, tax or accounting advice, unless explicitly agreed between you and Goldman Sachs (generally through certain services offered only to clients of Private Wealth Management). Any statement contained in this presentation concerning U.S. tax matters is not intended or written to be used and cannot be used for the purpose of avoiding penalties imposed on the relevant taxpayer. Notwithstanding anything in this document to the contrary, and except as required to enable compliance with applicable securities law, you may disclose to any person the US federal and state income tax treatment and tax structure of the transaction and all materials of any kind (including tax opinions and other tax analyses) that are provided to you relating to such tax treatment and tax structure, without Goldman Sachs imposing any limitation of any kind. Investors should be aware that a determination of the tax consequences to them should take into account their specific circumstances and that the tax law is subject to change in the future or retroactively and investors are strongly urged to consult with their own tax advisor regarding any potential strategy, investment or transaction.

Environmental, Social, and Governance (“ESG”) strategies may take risks or eliminate exposures found in other strategies or broad market benchmarks that may cause performance to diverge from the performance of these other strategies or market benchmarks. ESG strategies will be subject to the risks associated with their underlying investments’ asset classes. Further, the demand within certain markets or sectors that an ESG strategy targets may not develop as forecasted or may develop more slowly than anticipated.

The portfolio risk management process includes an effort to monitor and manage risk, but does not imply low risk.


This material is provided for informational purposes only and should not be construed as investment advice or an offer or solicitation to buy or sell securities. This material is not intended to be used as a general guide to investing, or as a source of any specific investment recommendations, and makes no implied or express recommendations concerning the manner in which any client’s account should or would be handled, as appropriate investment strategies depend upon the client’s investment objectives.

Economic and market forecasts presented herein reflect a series of assumptions and judgments as of the date of this presentation and are subject to change without notice. These forecasts do not take into account the specific investment objectives, restrictions, tax and financial situation or other needs of any specific client. Actual data will vary and may not be reflected here. These forecasts are subject to high levels of uncertainty that may affect actual performance. Accordingly, these forecasts should be viewed as merely representative of a broad range of possible outcomes. These forecasts are estimated, based on assumptions, and are subject to significant revision and may change materially as economic and market conditions change. Goldman Sachs has no obligation to provide updates or changes to these forecasts. Case studies and examples are for illustrative purposes only.

This material contains information that discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions. It also pertains to past performance or is the basis for previously-made discretionary investment decisions. This information should not be construed as a current recommendation, research or investment advice. It should not be assumed that any investment decisions shown will prove to be profitable, or that any investment decisions made in the future will be profitable or will equal the performance of investments discussed herein. Any mention of an investment decision is intended only to illustrate our investment approach and/or strategy, and is not indicative of the performance of our strategy as a whole. Any such illustration is not necessarily representative of other investment decisions.

This material has been prepared by Goldman Sachs Asset Management and is not financial research nor a product of Goldman Sachs Global Investment Research. It was not prepared in compliance with applicable provisions of law designed to promote the independence of financial analysis and is not subject to a prohibition on trading following the distribution of financial research. The views and opinions expressed may differ from the views and opinions expressed by Goldman Sachs Global Investment Research or other departments or divisions of Goldman Sachs and its affiliates. Investors are urged to consult with their financial advisors before buying or selling any securities. This information should not be relied upon in making an investment decision. Goldman Sachs Asset Management has no obligation to provide any updates or changes.

Portfolio holdings and/or allocations shown above are as of the date indicated and may not be representative of future investments. The holdings and/or allocations shown may not represent all of the portfolio's investments. Future investments may or may not be profitable.

Past performance does not guarantee future results, which may vary. The value of investments and the income derived from investments will fluctuate and can go down as well as up. A loss of principal may occur.

Although certain information has been obtained from sources believed to be reliable, we do not guarantee its accuracy, completeness or fairness. We have relied upon and assumed without independent verification, the accuracy and completeness of all information available from public sources.

References to indices, benchmarks or other measures of relative market performance over a specified period of time are provided for your information only and do not imply that the portfolio will achieve similar results. The index composition may not reflect the manner in which a portfolio is constructed. While an adviser seeks to design a portfolio which reflects appropriate risk and return features, portfolio characteristics may deviate from those of the benchmark.

Index Benchmarks

Indices are unmanaged. The figures for the index reflect the reinvestment of all income or dividends, as applicable, but do not reflect the deduction of any fees or expenses which would reduce returns. Investors cannot invest directly in indices.

The indices referenced herein have been selected because they are well known, easily recognized by investors, and reflect those indices that the Investment Manager believes, in part based on industry practice, provide a suitable benchmark against which to evaluate the investment or broader market described herein. The exclusion of “failed” or closed hedge funds may mean that each index overstates the performance of hedge funds generally.

Date of First Use: January 13, 2023. 302302-TMPL-01/2023-1724012