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Commentary iMGP Berkshire Dividend Growth ETF First Quarter 2024 Commentary

The iMGP Berkshire Dividend Growth ETF (Fund) returned 7.50% (NAV return) in the first quarter compared to 8.99% for the Russell 1000 Value Index. The Morningstar US Large Value category had a return of 8.84% in the first quarter of 2024.

Performance quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the funds may be lower or higher than the performance quoted. Short term performance is not a good indication of the fund’s future performance and should not be the sole basis for investing in the fund.To obtain standardized performance of the funds, and performance as of the most recently completed calendar month, please visit Returns less than one year are not annualized.  You may pay a commission to purchase an ETF.

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Quarterly Portfolio Manager Commentary

Springing Ahead

We are pleased to share updates on the the Fund. The first quarter included many positive performance trends. Several companies announced healthy dividend increases, perhaps indicating growth rates may be re-accelerating. The Fund also registered solid appreciation. Let’s take a closer look at these developments…

Q1 Dividend Increases

Are Dividend Growth Rates Re-accelerating?

3/19/2024   JP Morgan Increases Dividend by 9.5%

2/22/2024 – Chubb Increases Dividend by 5.8%

2/20/2024 – Walmart Increases Dividend by 9%

2/16/2024 – PPL Corp Increases Dividend by 7.3%

2/14/2024 – Cisco Systems Increases Dividend by 3%

2/09/2024 – Pepsico Increases Dividend by 7,1%

2/02/2024 – Chevron Increases Dividend by 8%

It’s worth noting a bank such as JPMorgan, a historically slow dividend grower like Walmart, and a recent dividend cutter such as PPL Corp saw notable increases in their dividends. This shows the potential for growth and resilience within our the Fund.

General Market Narrative

The equity rally continues to roll on, leaving us to question if we have canceled the recession. While consumer price index (CPI) remains hot, yields are on the rise, with the yield curve showing less inversion. Additionally, NVIDIA maintains its dominant position in the market, but we are witnessing some cooling off in the performance of Magnificent 7 stocks like Tesla and Apple.

The Fund has performed well, delivering a solid increase year-to-date that’s roughly in line with value-focused, equity income strategies. There is evidence the market is broadening away from just a few mega cap tech stocks that have dominated the index. The return of the equal-weighted S&P 500 index, which is more reflective of how a wide basket of stocks is performing, is now generating returns more closely aligned with the cap weighted S&P 500 which is dominated by a few large growth stocks.

Despite growth still being on top, we encourage you to stick with us as we believe the tides may be turning toward dividend-oriented strategies.

Sign of the Times

We have been closely following some of the top-read stories on Bloomberg this year, as they offer valuable insights into the market environment:

  • “A $560 Billion Property Warning Hits Banks from NY to Tokyo” (02.01.24): This warning highlights potential risks in the real estate sector across major cities.
  • “NY Community Bancorp Plunges as Real Estate Risks Jolt Market” (01.31.24): Real estate risks have had an impact on NY Community Bancorp.
  • “NVIDIA Rises Most in About Nine Months as AI Drives Sales” (02.22.24): The growth in AI sales has propelled Nvidia’s performance in recent times.
  • Additionally, we give an honorable mention to the Harvard Plagiarism Scandal, which has gained attention as the 14th most read story.

Apart from the top-read stories on Bloomberg, we have been closely monitoring some other intriguing developments this quarter:

  • Meta (formerly Facebook) announced its first dividend, sparking interest among investors who seek dividend paying opportunities. At the right valuation, this could be an interesting stock for dividend investors.
  • Japanese stocks have been on the move higher, raising questions about potential changes in world market leadership. Is Europe the next region to watch?
  • The CRB index (Commodity Research Bureau Index) has shown an upward trajectory, particularly in energy and other industrial commodities giving rise to discussions the battle against inflation may not be over, and bond yields are rising in turn.
  • While oil prices are moving higher, many mega-cap companies have yet to catch up with the rally in the underlying commodity.
  • Bank regulation has turned out to be less restrictive than initially feared, which may provide opportunities within the financial sector—a sector which has started to “perk up” after a rough few years.
  • The potential ban of TikTok has been a topic of interest, which may have wide-ranging implications.
  • Bitcoin made a strong comeback, capturing the attention of investors once again.

Looming Threats? (in rough order of magnitude)

As responsible asset managers, we also keep an eye on potential threats and risks in the market. Some significant concerns we are monitoring include:

  • Inflation and rising interest rates have the potential to impact the market and the overall economy.
  • Anecdotal reports suggest a significant housing inventory in hot markets like Dallas and Florida, as well as notable markdowns in NYC apartments. Additionally, there is an alarming record number of autos in a negative equity position.
  • Commercial real estate is an area of focus, as changing dynamics can impact valuations and investment opportunities.
  • The possibility of a China recession is a point of concern, given China’s significant role in the global economy.

A Deeper Dive into the Fund’s  Portfolio

Considering sector performance year-to-date, we are pleased to see Financials and Energy have emerged as the third and fourth best performing sectors. These are two key “value” sectors, and the strength highlights the potential opportunities moving forward.

Within our portfolio, there have been notable performers this year. The top five performers for the Fund YTD include: Waste Management, AbbVie, Qualcomm, Merck, Emerson Electric. We are also pleased with other notable wins, such as the performance of our recent Schwab purchase, the rebound of EOG, and Deere’s continued progress in embracing high-tech advancements.

While some investments have shown outstanding performance, it’s important to acknowledge the challenges faced by certain companies. The bottom five performers in our portfolio YTD include: Mondelez, Honeywell, McDonald’s, Apple, WP Carey.’

Amidst these varied performances, we have seen some remarkable recoveries. Key examples include regional banks, which have experienced significant rebounds of 30-50% since October. Norfolk Southern has also seen a sharp increase in value following the East Palestine disaster. Additionally, PP&L has broken out to new highs after a dividend cut in 2022. In the healthcare sector, select pharmaceutical companies are showing solid rebounds after a sluggish 2023. Are Pfizer and Bristol-Myers Squibb next?

All in all, this quarter has been promising for the market, dividend stocks, and our valued clients. No one knows the short-term direction of the market, but we believe the quality of our companies, dividend income and growth of income and attractive valuations continue to make the the Fund a foundational component of portfolios.

As of 3/31/2024

By SectorBDVGRussell 1000 Value
Consumer Discretionary5.5%5.0%
Information Technology16.9%9.4%
Communication Services0.0%4.6%
Health Care & Pharmaceuticals14.0%14.2%
Consumer Staples10.4%7.7%
Real Estate1.3%4.6%
By Market CapBDVG
Small Cap 0.0%
Mid Cap14.2%
Large Cap85.8%

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iMGP Funds emails provide investors a way to stay in touch with us and receive information regarding the funds and investment principles in general. Topics may include updates on the funds and managers, further insights into our investment team’s processes, and commentary on various aspects of investing.


The Funds’ investment objectives, risks, charges, and expenses must be considered carefully before investing. The statutory and summary prospectuses contain this and other important information about the investment company, and it may be obtained by calling 1-800-960-0188, or visiting Read it carefully before investing.

Investing  involves risk. Principal loss is possible. Past performance does not guarantee future results. 

Securities that pay dividends, as a group, may be out of favor with the market and underperform the overall equitymarket or stocks of companies that do not pay dividends.In addition, changes in the dividend policies of the companies held by the Fund orthe capitalresources available for such company’s dividend payments may adversely affect the Fund. Growth stocks are generally more sensitive to market movements than othertypes of stocks primarily because their prices are based heavily on the future expectations of the economy and the stock’s issuing company. The interconnectivity between global economies and financial markets increases the likelihood that events or conditions in one region or financial market may adversely impact issuers in a different country, region or financial market.

The Fund is newlyformed and has no operating history.

The Fund’s emphasis on dividend paying securities could cause the Fund to underperform funds thatinvestwithout consideration of a company’s track record of paying dividends.

The Fund is subject to the risk that the value of equity securities mayfluctuate, sometimes rapidly and unpredictably, due to factors affecting the general market, an entire industry or sector, or particular companies.

The Fund is exposed to certain risks such as its shares trading at a material discount to NAV as a result of its structure as an ETF.

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Each Morningstar Category Average represents a universe of Funds with similar investment objectives.

You cannot invest directly in an index.

Yield Curve: A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity dates. The most frequently reported yield curve compares the three-month, two-year, five-year and 30-year U.S. Treasury debt. The curve is used to predict changes in economic output and growth.

Fund holdings and/or sector allocations are subject to change at any time and are not recommendations to buy or sell any security.

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