Navigating thematic investing with THRO

Proprietary signals can help guide portfolio positioning. Themes showing strong investor interest, positive price momentum, and attractive valuations may warrant a larger allocation, while those losing relevance or overheating can be dialed down or removed altogether. This dynamic approach can be nimble, rotating into high-conviction opportunities while staying disciplined on risk.

To see how this process works in action, we look at three of THRO’s current positions: two overweights and one underweight.

TJX Companies (TJX): Tightening the Belt: Down the Consumer Value Chain

With economic uncertainty persisting, consumers are reprioritizing how they spend. A recent McKinsey survey found that most Americans have either adjusted their shopping habits or plan to do so by cutting back or switching to lower-cost brands.¹ Recognizing this potential trend, THRO has an overweight exposure to the Tightening the Belt theme.

Not all retailers are equally positioned to benefit. Companies with flexible sourcing models may have an edge over those more dependent on imports. As a leader in off-price retail, TJX Companies (1.4% in THRO)² sells brand-name goods, often 20%-60% lower than those found in traditional retail, by purchasing excess inventory already located in the U.S.³ This model helps it sidestep supply chain shocks while potentially capitalizing on softening demand in full-price retail.

The Tightening the Belt theme has been a contributor to THRO’s performance, outpacing both Consumer Discretionary and Consumer Staples sectors through May 2025. THRO’s consumer basket reflects an overweight stance relative to the S&P 500’s consumer sectors, tapping into the shift toward value-conscious spending and showing how THRO seeks to turn real-world consumer behavior into investment opportunities.

Cisco Systems (CSCO): Capex continued: Tech & infrastructure

Major technology companies are aggressively ramping up capital expenditures, with industry giants expected to spend $305 billion in 2025, largely to advance their AI ambitions.⁴ These investments extend well beyond chips and servers, flowing into fiber optics, power and cooling systems, and electronic components. THRO seeks to participate in this digital buildout through its overweight in the Capex Continued: Tech & Infrastructure theme.

Cisco Systems (1.3% in THRO)⁵, a provider of internet networking products and solutions, plays a role in enabling this expansion. As a potential to beneficiary of AI, automation, and reshoring tailwinds, Cisco received $600 million in AI product orders in 3Q25, surpassing its $1 billion full year target a quarter early. Demand from hyperscale cloud providers was a driver, with some accounts increasing orders by more than 100%.⁶ THRO’s position in Cisco shows how the fund seeks exposure across the broader ecosystem that may go beyond the more obvious names associated with AI.

JPMorgan Chase (JPM): Globally Integrated Service Providers

The impact of regulatory policies and geopolitical tensions has extended beyond supply chains. They’re slowing global capital flows and cross-border deal activity. Investment banking fees fell 6.3% year-over-year in early 2025,⁷ and a PwC survey found that 30% of deals were paused or revised due to shifting trade policies.⁸ Even approved deals risk being rerouted to regional players as firms seek more predictable operating environments. Since many U.S. megabanks already have significant domestic exposure, growth opportunities may depend in part on global diversification. In the meantime, the slowdown of global trade could accelerate financial reforms in other regions and reduce the need for U.S.-based services.

JPMorgan Chase (0% in THRO)⁹, a bellwether for multinational banking and financial services, faces these pressures given its position as a global investment bank. On its 1Q25 earnings call, CEO Jamie Dimon noted that large U.S. banks could be “in the crosshairs” of prolonged trade disputes. JPM’s vast network, moving over $10 trillion daily across 160+ countries in 120 currencies, shows how exposed global players may be to market fragmentation.¹⁰ These dynamics support THRO’s underweight position in both Globally Integrated Service Providers theme and JPM.

THRO’s active approach is designed for agility, adjusting exposures as market conditions evolve, leaning into areas of strength, and stepping back from those losing momentum. This discipline seeks to maintain the portfolio aligned with investor priorities while pursuing new opportunities for growth and return.

Holdings as of 7/31/2025 and subject to change. There is no guarantee that the companies discussed remain in the fund. For a complete list of most recent holdings, click on the fund card below. This is not meant as a guarantee of any future result or experience. This information should not be relied upon as research, investment advice or a recommendation regarding the Funds or any security in particular. Specific companies or issuers are mentioned for educational purposes only and should not be deemed as a recommendation to buy or sell any securities.