I always appreciate this opportunity at the close of the fiscal year to share my thoughts. First, let me start by saying that I am proud of the Verger team. We continue to share an ‘egos-out, sleeves up’ mindset, working cohesively to navigate a fast-paced, up-market environment to successfully capture differentiated upside.
In an environment often characterized by eye-catching headlines around narrow market leadership, I am proud of our approach to alpha generation. Specifically, how we seek to ‘win differently’ by going beyond the obvious investments and embracing contrarian ideas. We have the flexibility to be nimble – and this year, we used that agility to realize gains in previously unpopular niches (e.g., reinsurance) where we had invested after others had ‘thrown in the towel.’ We continue to seek out opportunities in less popular corners of the market, where we believe actual investment risk is less than perceived risk and our managers can actively create value (e.g., emerging market debt).
However, the availability of these opportunities does not change our view that long-horizon institutions need resilient portfolios constructed to perform over decades, not just quarters. As we evaluate the investments that were not additive to our portfolio’s performance during the fiscal year, we retain conviction in the longer-term thesis for each, and we expect these investments to be additive and diversifying to returns going forward, especially in less exuberant market environments. We will not lose sight of our thoughtful process to portfolio construction, which is aimed at driving durable results through market cycles.
Through the Lens of Market Themes
A key theme throughout the fiscal year was our continued conviction in the importance of maintaining a differentiated, resilient portfolio. In our 2025 Q3 Market Outlook we wondered about economic fragility beneath the surface of markets and expressed our view that an unwavering commitment to disciplined diversification is equally important when market sentiment is good or bad. We highlighted our desire to focus on compelling, slightly off the beaten path opportunities where we were finding attractive go-forward valuations (e.g., international small cap value stocks).
Continuing this line of thinking, in the 2025 Q4 Market Outlook we noted that future returns are mostly shaped by discipline, valuation, and expectations – not the past. Case in point: the 2025 College Football Playoff championship, where traditional powerhouses like Alabama and Ohio State watched from home as Indiana stepped into the spotlight. We opined that the next market leaders will not necessarily be the loudest or the most celebrated, but, more likely, the ones remaining under the radar who are best prepared for the environment ahead.
When volatility emerged in the new calendar year, many market segments reversed course and the Artemis II mission took to the sky. Our 2026 Q1 Market Outlook outlined how investing and space exploration are similarly defined by cycles rather than straight lines and pointed out a polarity in markets, with some segments in full launch mode and others weighed down by skepticism and fatigue. We highlighted our commitment to lean into areas where investor expectations were low and resilience was likely underappreciated, while maintaining caution where enthusiasm was likely ahead of fundamentals.
These themes remained relevant as the fiscal year ended with a quarter of strong performance, despite continued bouts of geopolitical uncertainty. Notably, U.S. equities had their strongest quarterly advance since 2020. In our 2026 Q2 Market Outlook we assumed the role of the student and voiced our responsibility to continue asking provocative questions, including: the potential longevity of elevated U.S. equity valuations, who might ultimately capture the economic value of artificial intelligence, and whether Treasuries’ can hold up their historical role as a hedge for equity risk. We also highlighted durable textbook lessons: that the price you pay for an asset matters and that successful long-term investing requires a combination of good upside capture and downside protection.
Going forward, we continue to keep an eye on levels of market speculation (for example, levered ETFs and daily options) and broad macroeconomic concerns – understanding that the historical pattern of market cycles is often driven by human nature, which can lend itself to swings between greed and fear and a resulting cycle of boom and bust. As caretakers and stewards of our clients’ long-term missions, we’re always thinking forward to future cycles and striving for durability through diversification.
Our Team: Ambition and Alignment
As part of our day-to-day focus on client outcomes, I’m proud of the way our investment team constantly considers and even embodies the range of nonprofit missions we serve. As highlighted in Verger’s 2025 Annual Report, we volunteer our time and expertise to local non-profits – and I take pride in seeing how they serve to motivate and inspire us all in our work.
We also bring excitement for our client missions out into the broader investment community – when we share thought leadership as speakers at conferences, flesh out opinions while visiting managers across the globe, or investigate ideas while performing site visits for unique investment opportunities. (See a few photos below for a look at the team in action.)
As we begin another fiscal year, I continue to feel grateful – for the team we’ve built and continue to strengthen, our shared caretaker mindset, and our clients. I feel well prepared for the wide range of market complexities and challenges we will undoubtedly face in the future, especially knowing that we will be standing shoulder-to-shoulder with each other and with our clients through it all. Thank you for this meaningful opportunity and for your continued partnership.
With best wishes for a great remainder of your summer,
Craig Thomas, Chief Investment Officer
