March 2025 edition

Visual Description: The video opens with the Truist logo on a dark purple background and transitions to a man with salt and pepper hair and a black jacket speaking to the camera. 

Keith Lerner: Markets have been speeding down the highway, 

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Text on Screen: Keith Lerner, CMT. Co-Chief Investment Officer, Chief Market Strategist.  Truist Advisory Services, Inc.

Keith Lerner: but in late February hit a stretch of fog. Suggested it was time to tap the brakes, not slam on them. Before we dive in, here are the key areas of focus in this month's insights. First, a house view shifts in late February. Next, leaning into our process during heightened uncertainty and lastly position amid the complexity. Now let's break it down.

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Text on Screen: House View Shifts in late February

Keith Lerner: In late February, we made some adjustments to our house views. As the weight of the evidence shifted toward a more mixed risk reward backdrop. Equities were moved from attractive to neutral or benchmark weighting. Cash was upgraded modestly to provide flexibility and small caps move lower due in part to weaker earnings. Put simply, we're staying invested, but we took a bit of a risk off the table.

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Text on Screen: Leaning into our process during heightened uncertainty 

Keith Lerner: With uncertainty being the big theme in markets right now and the news flow moving at a frenetic pace. A key aspect of our process is to filter out the noise, to focus on what matters.

Keith Lerner: Our weight of the evidence framework begins with a historical analysis that is then overlaid with economic fundamentals and market indicators, in an attempt to drive better portfolio outcomes under changing market conditions.

Keith Lerner: First, when we look at the historical analysis, the current bull market is maturing but still has potential upside. Eight of the past up cycles were stronger and longer than the current one.

Keith Lerner: However, prior to this recent setback, the S&P 500 has gone through the longest period without a 5% pullback since 2020, which suggests some downside has been overdue.

Keith Lerner: It is also common to see markets trade in a choppy fashion during the early months of a new presidency, as investors digest shifts in policy. That's what we're seeing today.

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Text on Screen: Our business cycle indicators are not recessionary but softening relative to high expectations

Keith Lerner: Next, our business cycle indicators suggest recession risk remains low, but economic data has been softening relative to high expectations entering the year amid this heightened policy uncertainty.

Keith Lerner:  We also see the potential for modest fiscal tightening in the forms of government job and spending cuts. At the same time, the fed has been on hold awaiting clarity on tariffs.

Keith Lerner: That said, the sharp move lower in the ten year US Treasury yield and oil prices should provide the economy a buffer in terms of lower consumer borrowing costs and inflation.

Keith Lerner: Importantly, businesses have repeatedly proven their ability to adapt over recent years and we see the potential for pent up demand to provide an upside jolt later in the year. Once there is that much needed policy clarity.

Keith Lerner: Third, fundamental analysis shows the S&P 500 forward earnings estimates. A key pillar of this bull market have flatlined over the past month.

Keith Lerner: This is occurring at a time when the S&P 500 trades at the top end of its valuation range, signaling a more mixed risk return market backdrop.

Keith Lerner: Finally, regarding market signals, the primary uptrend is intact, but not without some blemishes. 

Keith Lerner: As market participation has weakened with less than half of stocks in uptrends.

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Text on Screen: Positioning amid the complexity

Keith Lerner: So let's discuss positioning amid complexity. As mentioned, we modestly dial back our overall risk posture to neutral in late February not because we are negative, but because we are disciplined.

Keith Lerner: We continue to favor large caps over small caps filed by Mid-caps. International markets are showing some improvement, and investors should consider less extreme underweight.

Keith Lerner: We continue to emphasize a balanced portfolio approach diversifying stocks with high quality bonds,

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Text on Screen: Investing in gold and other commodities is speculative and involves a high degree of risk and is not suitable for all investors.  You could lose all or a substantial portion of your investment. Alternative strategies are not suitable for all investors. Many alternative strategies use sophisticated and aggressive techniques. Certain alternative strategies may be tied to hard assets such as commodities, currencies and real estate and may be subject to greater volatility as they may be affected by overall market movements, changes in interest rates of factors affecting a particular or currency and international economic, political and regulatory developments.

Keith Lerner: gold and alternatives, which can help stabilize portfolios in fluid market environments. Finally, a silver lining with this recent market pullback is the bar for positive surprises is being reset lower.

Keith Lerner: As always, we will continue to follow the weight of the evidence and keep an open mind as market conditions shift

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Asset classes are represented by the following indexes. An investment cannot be made directly into an index. S&P 500 Index is comprised of 500 widely-held securities considered to be representative of the stock market in general. The S&P index(es) and associated data are a product of S&P Dow Jones Indices LLC, its affiliates and/or their licensors and has been licensed for use by Truist. © 2025 S&P Dow Jones Indices LLC, its affiliates and/or their licensors. All rights reserved. Redistribution or reproduction in whole or in part are prohibited without written permission of S&P Dow Jones Indices LLC. S&P® is a registered trademark of Standard & Poor’s Financial Services LLC (“SPFS”) and Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”). Neither S&P Dow Jones Indices LLC, SPFS, Dow Jones, their affiliates nor their licensors (“S&P DJI”) make any representation or warranty, express or implied, as to the ability of any index to accurately represent the asset class or market sector that it purports to represent and S&P DJI shall have no liability for any errors, omissions, or interruptions of any index or the data included therein. Equity is represented by the MSCI ACWI captures large and mid cap representation across 23 Developed Markets (DM) and 24 Emerging Markets (EM) countries*. With 2,897 constituents, the index covers approximately 85% of the global investable equity opportunity set Fixed Income is represented by the Bloomberg U.S. Aggregate Index. The index measures the performance of the U.S. investment grade bond market. The index invests in a wide spectrum of public, investment-grade, taxable, fixed income securities in the United States – including government, corporate, and international dollar-denominated bonds, as well as mortgage-backed and asset-backed securities, all with maturities of more than 1 year.

Commodities are represented by the Bloomberg Commodity Index which is a composition of futures contracts on physical commodities. It currently includes a diversified mix of commodities in five sectors including energy, agriculture, industrial metals, precious metals and livestock. The weightings of the commodities are calculated in accordance with rules that ensure that the relative proportion of each of the underlying individual commodities reflects its global economic significance and market liquidity.

Cash is represented by the ICE BofA U.S. Treasury Bill 3 Month Index which is a subset of the ICE BofA 0-1 Year U.S. Treasury Index including all securities with a remaining term to final maturity less than 3 months.

U.S. Large Cap Equity is represented by the S&P 500 Index which is an unmanaged index comprised of 500 widely-held securities considered to be representative of the stock market in general.

U.S. Mid Cap is represented by the S&P MidCap 400® provides investors with a benchmark for mid-sized companies. The index, which is distinct from the large-cap S&P 500®, measures the performance of mid-sized companies, reflecting the distinctive risk and return characteristics of this market segment.

U.S. Small Cap Core Equity is represented by the S&P 600 Small Cap Index which is a measure of the performance of the small-cap segment of the U.S. equity universe

International Developed Markets is represented by the MSCI EAFE Index is an equity index which captures large and mid cap representation across 21 Developed Markets countries* around the world, excluding the U.S. and Canada. With 799 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in each country.

 Emerging Markets is represented by the MSCI Emerging Markets Index captures large and mid cap representation across 24 Emerging Markets (EM) countries*. With 1,386 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in each country.

Value is represented by the S&P 500 Value Index which is a subset of stocks in the S&P 500 that have the properties of value stocks. Growth is represented by the S&P 500 Growth Index which is a subset of stocks in the S&P 500 that have the properties of growth stocks.

U.S. Government Bonds are represented by the Bloomberg U.S. Government Index which is an unmanaged index comprised of all publicly issued, non-convertible domestic debt of the U.S. government or any agency thereof, or any quasi-federal corporation and of corporate debt guaranteed by the U.S. government.

U.S. Mortgage-Backed Securities are represented by the Bloomberg U.S. Mortgage-Backed Securities (MBS) Index which covers agency mortgage-backed pass-through securities (both fixed-rate and hybrid ARM) issued by Ginnie Mae (GNMA), Fannie Mae (FNMA), and Freddie Mac (FHLMC).

U.S. Investment Grade Corporate Bonds are represented by the Bloomberg U.S. Corporate Investment Grade Index which is an unmanaged index consisting of publicly issued U.S. Corporate and specified foreign debentures and secured notes that are rated investment grade (Baa3/BBB-or higher) by at least two ratings agencies, have at least one year to final maturity and have at least $250 million par amount outstanding.

U.S. High Yield Corp is represented by the ICE BofA U.S. High Yield Index tracks the performance of below investment grade, but not in default, U.S. dollar denominated corporate bonds publicly issued in the U.S. domestic market, and includes issues with a credit rating of BBB or below, as rated by Moody’s and S&P.

Floating Rate Bank Loans are represented by the Morningstar LSTA Leveraged Loan 100 Index. The index represents tradable, senior-secured, U.S.-dollar-denominated non-investment-grade loans.

Global Equity is represented by the MSCI All World Country (ACWI) Index which is defined as a free float-adjusted market capitalization-weighted index that is designed to measure the equity market performance of developed and emerging markets. The MSCI ACWI Index consists of 48 country indices comprising 24 developed markets countries and 24 emerging markets countries.

Emerging Markets Equity is represented by the MSCI EM Index which is defined as a free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets countries

Intermediate Term Municipal Bonds are represented by the Bloomberg Municipal Bond Blend 1-15 Year (1-17 Yr) is an unmanaged index of municipal bonds with a minimum credit rating of at least Baa, issued as part of a deal of at least $50 million, that have a maturity value of at least $5 million and a maturity range of 12 to 17 years.

U.S. Core Taxable Bonds are represented by the Bloomberg U.S. Aggregate Bond Index is a broad-based flagship benchmark that measures the investment grade, U.S. dollar-denominated, fixed-rate taxable bond market. The index includes Treasuries, government-related and corporate securities, MBS (agency fixed-rate and hybrid ARM pass-throughs), ABS and CMBS (agency and non-agency).

EU Corporate is represented by the Bloomberg Euro-Aggregate Corporates Index which is a benchmark that measures the corporate component of the Euro Aggregate Index and includes investment grade, euro-denominated, fixed-rate securities.

EM hard currency bonds are represented by the Bloomberg EM USD Aggregate – Sovereign Index, which is a subset of the Bloomberg Emerging Markets Hard Currency Aggregate Index, a flagship hard currency Emerging Markets debt benchmark that includes USD-denominated debt from sovereign, quasi-sovereign, and corporate EM issuers.

International developed markets bonds unhedged are represented by the ICE BofA Global Government ex U.S. Index which tracks the performance of publicly issued investment grade sovereign debt denominated in the issuer's own domestic currency excluding all securities denominated in U.S. dollars.

In order to qualify for inclusion in the Index, a country (i) must be a member of the FX-G10 or Western Europe; (ii) must have an investment grade rating.

U.S. preferred securities are represented by the ICE BofA Preferred Stock Fixed Rate Index which tracks the performance of fixed rate US dollar-denominated preferred securities issued in the US domestic market.

U.S. TIPS are represented by the ICE BofA U.S. Treasury Inflation Linked Index which is an unmanaged index comprised of US Treasury Inflation

Protected Securities with at least $1 billion in outstanding face value and a remaining term to final maturity of greater than one year.

High yield municipal bonds are represented by the Bloomberg HY Municipal Bond Index which is an unmanaged index made up of bonds that are non-investment grade, unrated, or rated below with a remaining maturity of at least one year.

S&P 500 Information Technology Index – a capitalization-weighted index that is composed of those companies included in the S&P 500 that are classified as members of the information technology sector based on GICS® classification.

S&P 500 Financials Index – a capitalization-weighted index that is composed of those companies included in the S&P 500 that are classified as members of the financials sector based on GICS® classification.

S&P 500 Energy Index – a capitalization-weighted index that is composed of those companies included in the S&P 500 that are classified as members of the energy sector based on GICS® classification.

S&P 500 Materials Index – a capitalization-weighted index that is composed of those companies included in the S&P 500 that are classified as members of the materials sector based on GICS® classification.

S&P 500 Industrials Index – a capitalization-weighted index that is composed of those companies included in the S&P 500 that are classified as members of the industrials sector based on GICS® classification.

S&P 500 Consumer Discretionary Index – a capitalization-weighted index that is composed of those companies included in the S&P 500 that are classified as members of the consumer discretionary sector based on GICS® classification.

S&P 500 Communication Services Index – a capitalization-weighted index that is composed of those companies included in the S&P 500 that are classified as members of the communication services sector based on GICS® classification.

S&P 500 Utilities Index – a capitalization-weighted index that is composed of those companies included in the S&P 500 that are classified as members of the utilities sector based on GICS® classification.

S&P 500 Consumer Staples Index – a capitalization-weighted index that is composed of those companies included in the S&P 500 that are classified as members of the consumer staples sector based on GICS® classification.

S&P 500 Health Care Index – a capitalization-weighted index that is composed of those companies included in the S&P 500 that are classified as members of the health care sector based on GICS® classification.

S&P 500 Real Estate Index – a capitalization-weighted index that is composed of those companies included in the S&P 500 that are classified as members of the real estate sector based on GICS® classification.

The HFRI Fund Weighted Composite Index which is a global, equal-weighted index of single-manager funds that report to HFR Database.

Constituent funds report monthly net of all fees performance in US Dollar and have a minimum of $50 Million under management or a twelve (12) month track record of active performance.

The HFRI Macro (Total) Index includes managers with a broad range of strategies in which the investment process in predicated on movements in underlying economic variables and the impact these have on equity, fixed income, hard currency, and commodities markets.

Investing in commodities is speculative and involves a high degree of rise and not suitable for all investors.

Hedge funds often engage in leveraging and speculative investment practices that may increase the risk of investment loss, can be highly illiquid, and are not required to provide periodic pricing or valuation information to investors.

Hedge funds may involve complex tax structures and delays in distributing tax information. Hedge funds are not subject to the same regulatory requirements as mutual funds and often charge higher fees.   Investing in commodities is speculative and involves a high degree of risk and not suitable for all investors. You could lose all or a substantial portion of your investment.

The  Morningstar LSTA Leveraged Loan Index is a service mark of Morningstar, Inc. and has been licensed for certain purposes by Truist Bank. Morningstar and the Loan Syndications and Trading Association

(LSTA) do not guarantee the accuracy and/or completeness of the Truist or any data included therein and shall have no liability for the use of such data.

Alternative strategies are not suitable for all investors. Many alternative strategies use sophisticated and aggressive techniques. Certain alternative strategies may be tied to hard assets such as commodities, currencies and real estate and may be subject to greater volatility as they may be affected by overall market movements, changes in interest rates of factors affecting a particular or currency, and international economic, political, and regulatory developments.

Investing in commodities is speculative and involves a high degree of risk and not suitable for all investors.

©2025 Truist Financial Corporation. Truist®, the Truist logo, and Truist purple are service marks of Truist Financial Corporation. All rights reserved.

CN:2025-7602085.1 EXP 02-2026