Why active management is earning its keep

July was a solid month for Frontier Strategies, as our multi-layered risk management approach was additive. Most Strategies kept up or outperformed benchmarks during this fractured but narrow market. For the year-to-date and one-year periods, most Frontier Strategies remain materially above their benchmarks.

Frontier Strategies are benefiting from a broadening market, in which asset classes like small-cap stocks and emerging market stocks are experiencing outsized returns.

What worked in July

• Growth strategies, tech-heavy funds, and indexing drove gains in the second quarter but lagged significantly for the month.
• Defensive managers like First Eagle Global and value funds in general were the point of diversification for the month.
• Alternative strategies like covered calls and Victory Market Neutral were additive for the month.

The right mix of funds and strategies

In terms of fund and strategy diversification, our Strategies continue to hold robust combinations of funds with differentiated performance patterns. We have lost less when markets declined and captured enough upside when markets gained to finish mostly ahead of our benchmarks over the one-year period.

Frontier’s Balanced Strategy and Moderate Growth Strategy: current allocation vs. long-term target.

Source: Frontier Asset Management. Data as of June 1, 2026. Past performance is no guarantee of future returns. Please refer to important disclosure information.

The major performance theme for this year is confirmation of our “strategy” mixes. Because we optimize fund strategies as well as asset allocations, we are effectively combining each fund’s differentiated investment strategy and performance pattern. These patterns are often different from those of the indexes. This “strategy” diversification can be greatly beneficial in difficult markets and can generate excess return over time.

Everybody wants to win when the winning is good, but investors will face a myriad of outcomes over their investment horizons. Proper diversification should account for the multiple market environments that are possible in the future, not just the single path that has occurred in the past.

Mutual fund corner: The Case for First Eagle Global

We are clearly living in a momentum-based investment environment. Thematic story-based stock ideas are thrown around the echo chamber, and investors want in on what is “hot.” Indexes, too, are wholehearted participants, as market-cap weighting rewards whatever has gone up in value. It’s not just the S&P 500 that has become tech-heavy; it is also many other indexes that make up the asset allocation pie charts that the industry puts so much faith in.

Add to that, the idea that stocks and bonds have been correlated in the higher-for-longer post-COVID environment. In down months for stocks, bonds are either leading the way or are dragged down as well.

Where is an investor to go for diversification, which is just another word for taking advantage of change? The last tool left to provide added value in down markets may just be the thing that almost the entire industry has abandoned: active management. True strategy diversification and pure stock selection may be your only hedge to take advantage of change.

Case in point: First Eagle Global. First Eagle Global has long represented defensive equity exposure in our portfolios. And with the market forces competing between momentum and fundamentals, First Eagle has historically been a winner when a momentum-driven market changes direction.

First Eagle Global July performance. Source: YCharts, data as of July 31, 2026.

Strategy diversification is not the same thing as index diversification.

First Eagle Global does not represent a pie slice per se in our portfolios; it represents exposure to those specific businesses that tend to perform well in times of stress.

Quick answers