Investment Strategy

Comparing the S&P 500 Information Technology Index in 1999 vs today

The success and run-up of mega-cap tech stocks associated with AI has understandably led to comparisons with the dot-com bubble of the late 1990’s which peaked in early 2000. The more frequent investor concern we hear centers around the duration and level of returns as well as the current elevated valuations of associated companies. Our report last week compared the S&P 500 Index in 1999 with the Index today. Our report this week tackles that question from a different perspective.

The release of ChatGPT in November 2022 acted as the starting gun for the current AI race. The release of the first widely adopted internet web browser in December 1994 did the same for the internet investment cycle. To date, S&P 500 Information Technology sector returns have closely tracked the 1990’s analog (see Chart 1). But when we zoom out, we see just how much further the sector would need to inflate before approaching the dot-com bubble peak. Of course, past performance is not a guarantee of future results.

Chart 1. Dot-com bubble dwarfs recent AI driven returnsSources: Bloomberg and Wells Fargo Investment Institute. Data: December 15, 1994 - March 27, 2000 and November 30, 2022 - November 11, 2025. Indexed to 100 as of the start date. Constituents of the S&P 500 Information Technology Index is materially different 1994 through 1999 than it is today. For illustrative and educational purposes only and not a recommendation of an investment. An index is unmanaged and not available for direct investment. Past performance is no guarantee of future results.

These strong returns over the past few years, though, have lifted valuations (see chart below) for the market and technology-related companies, as well as for the handful of AI darlings above historical norms. Yet, there is a stark difference between today’s valuations and those at the 2000 peak.

Chart 2 illustrates this point by plotting the price-to-earnings (P/E) multiple of the S&P 500 Information Technology sector, the average P/E of the largest six technology companies, and the largest technology company each at the bubble peak in 2000 as well as today. It is astonishing to think that from today’s already elevated levels, valuations would need to roughly double for the technology sector, triple for the top six technology companies, and quadruple for the largest technology company to reach dot-com peak P/E multiples. Of course, past performance is not a guarantee of future results.

None of this is to deny that there are pockets of froth in the market — there are. But the notion that these metrics are currently on par with 2000 is, in our view, demonstrably incorrect.¹

Chart 2. Valuations are not anywhere near dot-com peak levelsSources: Bloomberg and Wells Fargo Investment Institute. Daily data as of March 27, 2000, and November 11, 2025. Trailing 12-month price-to-earnings (P/E) multiple is displayed. Top six tech is represented by the average P/E of the six largest technology-related companies by market cap as of each date. Top tech is the largest technology-related company by market cap as of each date. Top technology related company in 2000 was Cisco Systems Inc. and 2025 is Nvidia Corp. An index is unmanaged and not available for direct investment. For illustrative and educational purposes only. Past performance is no guarantee of future results.

Our view is that a durable technology spending trend, which includes AI and other categories like cybersecurity, is in progress and that the economy is still closer to the beginning than to the end of this buildout. Earnings, sales, and capital expenditure plans for the mega-cap tech companies that have led this trend have surprised to the upside — including in the most recent reporting season. Additionally, the consensus expectation is for this group to experience above-market earnings growth for the foreseeable future². The prices of these, and other tech-related companies, may at times run too far too fast, leaving them susceptible to disappointment.

In our view, this has been the case recently. As a result, on August 5, we trimmed profits and downgraded the S&P 500 Communication Services sector from favorable to neutral. On October 30, we did the same for the S&P 500 Information Technology sector.

We directed those a to our favored S&P 500 Utilities, Industrials, and Financials sectors, which we believe offer ancillary exposure to the technology trend with more attractive valuations. The goal of this rebalancing is to reduce allocations where prices have become the most extended and to reposition into potentially better values.

¹ Constituents used for comparison are different today than the constituents in 2000.

² As reported by Bloomberg. Market earnings growth represented by the S&P 500 Index.

Potential for higher U.S. Treasury yields ahead

In the past two weeks, after the October 29 Federal Reserve Open Market Committee meeting, long-term U.S. Treasury yields have moved slightly higher and bond-market volatility has increased. In our view, there is potential for the U.S. Treasury yield curve to steepen further (longer term rates moving higher than shorter term rates) prompting additional volatility. Over the past five years, there have been other instances when bond-market volatility increased as the 10-year U.S. Treasury yield rose (see Chart 3). In four of those cases, volatility remained above its five-year average for several months after the initial Treasury yield increase. While past performance is not a guarantee of future results, we believe that upcoming bouts of volatility will likely create additional pressure on bond prices, particularly at the long end of the yield curve.

Although bond-market volatility has been trending lower (and below the five-year average) for several months this year, we now anticipate a resumption of bond-market volatility, especially as the government shutdown has come to an end and the Fed continues on the path of additional policy rate cuts. We reiterate our preference for Intermediate Term Investment Grade Fixed Income. These maturities appear more attractive to us than shorter and longer maturities. Short-term rates could fall while the Fed cuts interest rates further. We also foresee potential volatility risks to long-maturity fixed-income returns. In short, we prefer these intermediate-term maturities to lock in higher yields than short-term securities currently offer and with less return volatility than long-dated maturities.

Chart 3. Expect increased bond-market volatility as yields riseSources: Bloomberg and Wells Fargo Investment Institute, as of November 11, 2025. Daily data from November 11, 2020, to November 11, 2025. The chart shows Bloomberg U.S. Aggregate Bond Index volatility and the 10-year U.S. Treasury yield. Circles depict periods of increased U.S. bond-market volatility. For illustrative purposes only. Bond prices fall as yields rise. Yields represent past performance and fluctuate with market conditions. An index is unmanaged and not available for direct investment. Past performance is no guarantee of future results.

Beef prices continue to climb on low herd populations

Commodities continued to show strong performance, with the Bloomberg Commodity Total Return Index (BCOMTR) up 13.8% year-to-date, as of November 10. While Precious Metals and Industrial Metals have been the relative outperformers and garnered much of the attention this year, the lessor weighted group, livestock, has also come into the spotlight amid a 24% rise in live cattle prices year-to-date, as of November 10.

Despite accounting for a small weighting of the BCOMTR, prices of cattle and other food-related commodities are still important to everyday consumers and their spending habits.

While factors such as relatively high interest rates, trade policy uncertainties, and tariffs all impact ranchers and beef prices, we believe one of the most potent drivers of higher beef prices has been the extended cattle cycle. Cattle herds typically go through 8-12 year cycles, marked by expansions and contractions of the herd population in response to changing prices (see Chart 4). Typically, declining or low herd populations have coincided with rising prices, while herd growth has coincided with lower prices.

Today, we are in year 11 of the current cycle, in which herd populations near record lows have driven higher prices. In response to a shrinking supply of domestic cattle over the years, imports rose to account for roughly 16% of domestic consumption in 2024³ and are up 24% year-over-year, as of September 2025.

Unfortunately for consumers, however, higher imports have done little to stem the rise in beef prices. Given the relatively slow nature of raising cattle and herd populations, we suspect that low domestic herd populations will likely continue to drive high beef prices for the foreseeable future.

Chart 4. The cattle cycle — low herds drive higher pricesSources: Bloomberg and Wells Fargo Investment Institute. Semi-annual data is from June 2000 – June 2025. Past performance is no guarantee of future results.

³ United States Department of Agriculture Cattle and Beef Statistics. Annual data is as of 2024.

Hedge funds post gains as assets near $5 trillion

Hedge Fund Research (HFR) reported that the HFRI Fund Weighted Composite Index rose 0.7% in October, bringing year-to-date performance to 10.3%. Most hedge fund sub-indexes contributed positively during the month, apart from Activist.

According to HFR, global hedge fund assets also increased to nearly $5 trillion by the end of the third quarter, supported by both investment gains and strong investor inflows. This quarter marked the largest net inflow since the third quarter of 2007, potentially signaling renewed interest in hedge funds.

Both Macro – Systematic and Macro – Discretionary sub-indexes delivered strong returns in October (See chart 5). However, the Discretionary sub-index has continued to outperform the Systematic sub-index year-to-date, as many systematic managers were impacted by price trend reversals across stock, commodity, currency, and interest-rate markets earlier in the year.

Within Equity Hedge and Relative Value categories, Long/Short sub-indexes have outperformed Market Neutral and Arbitrage sub-indexes year-to-date (see chart). We believe the flexibility in adjusting market exposure has helped many long/short managers to capture upside in public markets compared to their more defensive market neutral counterparts.

In the Event Driven category, both Merger Arbitrage and Distressed Credit sub-indexes have delivered returns of over 8% year-to-date. Many merger arbitrage managers benefited from steady deal flow and timely deal closures.

We recently upgraded the Merger Arbitrage sub-strategy to favorable and continue to prefer Macro – Discretionary, Long/Short Equity, and Long/Short Credit sub-strategies over other Hedge Fund strategies. We believe these favored strategies have the potential to benefit from moderating interest rates, gradual economic recovery, rising public markets, and continued merger and acquisition activity through 2026.

Chart 5. Most hedge fund strategies posted positive October performance and strong year-to-date returnsSources: Hedge Fund Research, Wells Fargo Investment Institute. Data as of October 31, 2025. An index is unmanaged and not available for direct investment. Past performance is no guarantee of future results. Please see page 9-11 for important risk and index definitions.

Alternative investments, such as hedge funds, private equity, private debt and private real estate funds are not appropriate for all investors and are only open to “accredited” or “qualified” investors within the meaning of U.S. securities laws.

Cash Alternatives and Fixed Income

Equities

Real Assets

Alternative Investments**

Source: Wells Fargo Investment Institute, November 17, 2025.

*Tactical horizon is 6-18 months

**Alternative investments are not appropriate for all investors. They are speculative and involve a high degree of risk that is appropriate only for those investors who have the financial sophistication and expertise to evaluate the merits and risks of an investment in a fund and for which the fund does not represent a complete investment program. Please see end of report for important definitions and disclosures.

Each asset class has its own risk and return characteristics. The level of risk associated with a particular investment or asset class generally correlates with the level of return the investment or asset class might achieve. Stock markets, especially foreign markets, are volatile. Stock values may fluctuate in response to general economic and market conditions, the prospects of individual companies, and industry sectors. Foreign investing has additional risks including those associated with currency fluctuation, political and economic instability, and different accounting standards. These risks are heightened in emerging markets. Small- and mid-cap stocks are generally more volatile, subject to greater risks and are less liquid than large company stocks. Bonds are subject to market, interest rate, price, credit/default, liquidity, inflation and other risks. Prices tend to be inversely affected by changes in interest rates. High yield (junk) bonds have lower credit ratings and are subject to greater risk of default and greater principal risk. Although Treasuries are considered free from credit risk they are subject to other types of risks. These risks include interest rate risk, which may cause the underlying value of the bond to fluctuate. The commodities markets are considered speculative, carry substantial risks, and have experienced periods of extreme volatility. Investing in a volatile and uncertain commodities market may cause a portfolio to rapidly increase or decrease in value which may result in greater share price volatility. Investing in gold, silver or other precious metals involves special risk considerations such as severe price fluctuations and adverse economic and regulatory developments affecting the sector or industry. Real estate has special risks including the possible illiquidity of underlying properties, credit risk, interest rate fluctuations and the impact of varied economic conditions.

Sector investing can be more volatile than investments that are broadly diversified over numerous sectors of the economy and will increase a portfolio’s vulnerability to any single economic, political, or regulatory development affecting the sector. This can result in greater price volatility. Communication services companies are vulnerable to their products and services becoming outdated because of technological advancement and the innovation of competitors. Companies in the communication services sector may also be affected by rapid technology changes; pricing competition, large equipment upgrades, substantial capital requirements and government regulation and approval of products and services. In addition, companies within the industry may invest heavily in research and development which is not guaranteed to lead to successful implementation of the proposed product. Investing in the Financial services companies will subject an investment to adverse economic or regulatory occurrences affecting the sector. There is increased risk investing in the Industrials sector. The industries within the sector can be significantly affected by general market and economic conditions, competition, technological innovation, legislation and government regulations, among other things, all of which can significantly affect a portfolio’s performance. Risks associated with the Technology sector include increased competition from domestic and international companies, unexpected changes in demand, regulatory actions, technical problems with key products, and the departure of key members of management. Technology and Internet-related stocks, especially smaller, less-seasoned companies, tend to be more volatile than the overall market. Utilities are sensitive to changes in interest rates, and the securities within the sector can be volatile and may underperform in a slow economy.

Alternative investments, such as hedge funds, private equity/private debt and private real estate funds, are speculative and involve a high degree of risk that is appropriate only for those investors who have the financial sophistication and expertise to evaluate the merits and risks of an investment in a fund and for which the fund does not represent a complete investment program. They entail significant risks that can include losses due to leveraging or other speculative investment practices, lack of liquidity, volatility of returns, restrictions on transferring interests in a fund, potential lack of diversification, absence and/or delay of information regarding valuations and pricing, complex tax structures and delays in tax reporting, less regulation and higher fees than mutual funds. Hedge fund, private equity, private debt and private real estate fund investing involves other material risks including capital loss and the loss of the entire amount invested. A fund's offering documents should be carefully reviewed prior to investing.

Hedge fund strategies, such as Equity Hedge, Event Driven, Macro and Relative Value, may expose investors to the risks associated with the use of short selling, leverage, derivatives and arbitrage methodologies. Short sales involve leverage and theoretically unlimited loss potential since the market price of securities sold short may continuously increase. The use of leverage in a portfolio varies by strategy. Leverage can significantly increase return potential but create greater risk of loss. Derivatives generally have implied leverage which can magnify volatility and may entail other risks such as market, interest rate, credit, counterparty and management risks. Arbitrage strategies expose a fund to the risk that the anticipated arbitrage opportunities will not develop as anticipated, resulting in potentially reduced returns or losses to the fund.

Bloomberg Commodity Total Return Index reflects the returns that are potentially available through an unleveraged investment in the futures contracts on 19 physical commodities comprising the Index plus the rate of interest that could be earned on cash collateral invested in specified Treasury Bills. The Index is a rolling index rebalancing annually.

Bloomberg U.S. Aggregate Bond Index is a broad-based measure of the investment grade, US dollar-denominated, fixed-rate taxable bond market.

S&P 500 Index is a market capitalization-weighted index composed of 500 widely held common stocks that is generally considered representative of the US stock market.

S&P 500 Communication Services Index comprises those companies included in the S&P 500 that are classified as members of the GICS® communication services sector.

S&P 500 Information Technology Index comprises those companies included in the S&P 500 that are classified as members of the GICS® information technology sector.

HFRI Fund Weighted Composite Index is a global, equal-weighted index of over 2,000 single-manager funds that report to HFR Database. Constituent funds report monthly net of all fees performance in US Dollars and have a minimum of $50 Million under management or a twelve (12) month track record of active performance. The HFRI Fund Weighted Composite Index does not include funds of hedge funds.

HFRI Indices have limitations (some of which are typical of other widely used indices). These limitations include survivorship bias (the returns of the indices may not be representative of all the hedge funds in the universe because of the tendency of lower performing funds to leave the index); heterogeneity (not all hedge funds are alike or comparable to one another, and the index may not accurately reflect the performance of a described style); and limited data (many hedge funds do not report to indices, and, therefore, the index may omit funds, the inclusion of which might significantly affect the performance shown. The HFRI Indices are based on information self-reported by hedge fund managers that decide on their own, at any time, whether they want to provide, or continue to provide, information to HFR Asset Management, L.L.C. Results for funds that go out of business are included in the index until the date that they cease operations. Therefore, these indices may not be complete or accurate representations of the hedge fund universe and may be biased in several ways. Returns of the underlying hedge funds are net of fees and are denominated in USD.

Funds that become ineligible are removed from the index in a manner consistent with real market options and practices within a timeframe reflecting actual market conditions. AUM will be redistributed among existing constituents or allocated to a new constituent or both. Due to mutual agreements with the hedge fund managers listed in the HFR Database, we are not at liberty to disclose the particular funds behind any index to non-database subscribers.

Global Hedge Funds. HFRI Fund Weighted Composite Index. A global, equal-weighted index of over 2,000 single-manager funds that report to HFR Database. Constituent funds report monthly net-of-all-fees performance in U.S. Dollars and have a minimum of $50 Million under management or a 12-month track record of active performance. The HFRI Fund Weighted Composite Index does not include Funds of Hedge Funds.

Relative Value. HFRI Relative Value (Total) Index. Strategy is predicated on realization of a valuation discrepancy in the relationship between multiple securities. Managers employ a variety of fundamental and quantitative techniques to establish investment theses, and security types range broadly across equity, fixed income, derivative or other security types. Fixed income strategies are typically quantitatively driven to measure the existing relationship between instruments and, in some cases, identify attractive positions in which the risk adjusted spread between these instruments represents an attractive opportunity for the investment manager. Relative Value (RV) position may be involved in corporate transactions also, but as opposed to Event Driven (ED) exposures, the investment thesis is predicated on realization of a pricing discrepancy between related securities, as opposed to the outcome of the corporate transaction.

Arbitrage. HFRI RV: Multi-Strategy Index: multi-strategies employ an investment thesis predicated on realization of a spread between related yield instruments in which one or multiple components of the spread contains a fixed income, derivative, equity, real estate, MLP or combination of these or other instruments. Strategies are typically quantitatively driven to measure the existing relationship between instruments and, in some cases, identify attractive positions in which the risk adjusted spread between these instruments represents an attractive opportunity for the investment manager.

Long/Short Credit. HFRI RV: Fixed Income — Corporate Index. Includes strategies predicated on realization of a spread between related instruments in which one or multiple components of the spread is a corporate fixed-income instrument. Strategies are designed to isolate attractive opportunities between a variety of fixed income instruments, typically realizing an attractive spread between multiple corporate bonds or between a corporate and risk free government bond. They typically involve arbitrage positions with little or no net credit market exposure, but are predicated on specific, anticipated idiosyncratic developments.

Structured Credit/Asset Backed. HFRI RV: Fixed Income — Asset Backed Index. Includes strategies predicated on realization of a spread between related instruments in which one or multiple components of the spread is a fixed-income instrument backed by physical collateral or other financial obligations (loans, credit cards) other than those of a specific corporation. Strategies are designed to isolate attractive opportunities between a variety of fixed income instruments specifically securitized by collateral commitments, which frequently include loans, pools and portfolios of loans, receivables, real estate, machinery or other tangible financial commitments. Investment thesis may be predicated on an attractive spread given the nature and quality of the collateral, the liquidity characteristics of the underlying instruments and on issuance and trends in collateralized fixed-income instruments, broadly speaking. In many cases, investment managers hedge, limit, or offset interest-rate exposure in the interest of isolating the risk of the position to strictly the disparity between the yield of the instrument and that of the lower-risk instruments.

Macro. HFRI Macro (Total) Index. Encompass a broad range of strategies predicated on movements in underlying economic variables and the impact these have on equity, fixed income, hard-currency, and commodity markets. Managers employ a variety of techniques, both discretionary and systematic analysis, combinations of top-down and bottom-up theses, quantitative and fundamental approaches and long- and short-term holding periods. Although some strategies employ RV techniques, Macro strategies are distinct from RV strategies in that the primary investment thesis is predicated on predicted or future movements in the underlying instruments rather than on realization of a valuation discrepancy between securities. In a similar way, while both Macro and equity hedge managers may hold equity securities, the overriding investment thesis is predicated on the impact movements in underlying macroeconomic variables may have on security prices, as opposed to Equity Hedge (EH), in which the fundamental characteristics on the company are the most significant are integral to investment thesis.

Systematic Macro. HFRI Trend Following Directional Index is a global, equal-weighted index of single-manager funds that report to the HFR Database. The HFRI Trend Following Directional Index is comprised of funds that employ trend following strategies such as Macro: Currency – Systematic, Macro: Systematic Diversified, certain Macro: Multi-Strategy funds and other Macro funds that utilize, to some degree, trend following.

Discretionary Macro. HFRI Macro: Discretionary Thematic Index. Strategies primarily rely on the evaluation of market data, relationships and influences, as interpreted by individuals who make decisions on portfolio positions; strategies employ an investment process most heavily influenced by top-down analysis of macroeconomic variables. Investment Managers may trade actively in developed and emerging markets, focusing on both absolute and relative levels on equity markets, interest rates/fixed income markets, currency and commodity markets; they frequently employ spread trades to isolate a differential between instrument identified by the Investment Manager as being inconsistent with expected value. Portfolio positions typically are predicated on the evolution of investment themes the Manager expects to develop over a relevant time frame, which in many cases contain contrarian or volatility-focused components.

Event Driven. HFRI Event Driven (Total) Index. Maintains positions in companies currently or prospectively involved in corporate transactions of a wide variety including mergers, restructurings, financial distress, tender offers, shareholder buybacks, debt exchanges, security issuance or other capital structure adjustments. Security types can range from most senior in the capital structure to most junior or subordinated and frequently involve additional derivative securities. Exposure includes a combination of sensitivities to equity markets, credit markets and idiosyncratic, company-specific developments. Investment theses are typically predicated on fundamental (as opposed to quantitative) characteristics, with the realization of the thesis predicated on a specific development exogenous to the existing capital structure.

Activist. HFRI ED: Activist Index. Strategies may obtain or attempt to obtain representation on the company’s board of directors in an effort to impact the firm’s policies or strategic direction and in some cases may advocate activities such as division or asset sales, partial or complete corporate divestiture, dividends or share buybacks, and changes in management. Strategies employ an investment process primarily focused on opportunities in equity and equity-related instruments of companies that are currently or prospectively engaged in a corporate transaction, security issuance/repurchase, asset sales, division spin-off or other catalyst-oriented situation. These involve both announced transactions and situations in which no formal announcement is expected to occur. Activist strategies would expect to have greater than 50% of the portfolio in activist positions, as described.

Distressed Credit. HFRI Event Driven Directional Index is a global, equal-weighted index of single-manager funds that report to the HFR Database. The HFRI Event Driven Directional Index is comprised of Event Driven Funds that are classified as Special Situations, Credit Arbitrage and Distressed funds.

Merger Arbitrage. HFRI ED: Merger Arbitrage Index. Strategies primarily focus on opportunities in equity and equity-related instruments of companies that are currently engaged in a corporate transaction. Merger Arbitrage involves primarily announced transactions, typically with limited or no exposure to situations in which no formal announcement is expected to occur. Opportunities are frequently presented in cross-border, collared, and international transactions that incorporate multiple geographic regulatory institutions, typically with minimal exposure to corporate credits. Strategies typically have over 75% of positions in announced transactions over a given market cycle.

Equity Hedge. HFRI Equity Hedge (Total) Index. Equity Hedge: Investment Managers who maintain positions both long and short in primarily equity and equity derivative securities. A wide variety of investment processes can be employed to arrive at an investment decision, including both quantitative and fundamental techniques; strategies can be broadly diversified or narrowly focused on specific sectors and can range broadly in terms of levels of net exposure, leverage employed, holding period, concentrations of market capitalizations and valuation ranges of typical portfolios. EH managers would typically maintain at least 50% exposure to, and may in some cases be entirely invested in, equities, both long and short.

Directional Equity. HFRI EH: Long/Short Directional Index is a global, equal-weighted index of single-manager funds that report to the HFR Database. The HFRI EH: Long/Short Directional Index is comprised of Equity Hedge funds that are not considered Equity Market Neutral. The HFRI EH: Long/Short Directional Index includes funds that are classified as Fundamental Growth, Fundamental Value, Multi-Strategy, Quantitative Directional and sector-focused (i.e., Energy/Basic Materials, Healthcare and Technology).

Equity Market Neutral. HFRI EH: Equity Market Neutral Index. Strategies employ sophisticated quantitative techniques to analyze price data to ascertain information about future price movement and relationships between securities. These can include both Factor-based and Statistical Arbitrage/Trading strategies. Factor-based investment strategies include strategies predicated on the systematic analysis of common relationships between securities. In many cases, portfolios are constructed to be neutral to one or multiple variables, such as broader equity markets in dollar or beta terms, and leverage is frequently employed to enhance the return profile of the positions identified. Statistical Arbitrage/Trading strategies consist of strategies predicated on exploiting pricing anomalies which may occur as a function of expected mean reversion inherent in security prices; high-frequency techniques may be employed; trading strategies may also be based on technical analysis or designed opportunistically to exploit new information that the investment manager believes has not been fully, completely, or accurately discounted into current security prices. Strategies typically maintain characteristic net equity market exposure no greater than 10% long or short.

Note: While the HFRI Indices are frequently used, they have limitations (some of which are typical of other widely used indexes). These limitations include survivorship bias (the returns of the indexes may not be representative of all the hedge funds in the universe because of the tendency of lower performing funds to leave the index); heterogeneity (not all hedge funds are alike or comparable to one another, and the index may not accurately reflect the performance of a described style); and limited data (many hedge funds do not report to indexes, and, therefore, the index may omit funds, the inclusion of which might significantly affect the performance shown. The HFRI Indices are based on information hedge fund managers decide on their own, at any time, whether or not they want to provide, or continue to provide, information to HFR Asset Management, L.L.C. Results for funds that go out of business are included in the index until the date that they cease operations. Therefore, these indexes may not be complete or accurate representations of the hedge fund universe, and may be biased in several ways. Returns of the underlying hedge funds are net of fees and are denominated in USD.

An index is unmanaged and not available for direct investment.

Mega-cap tech stocks are the largest publicly traded technology related companies with a market capitalization generally considered to be over $200 billion.

Investment Grade bonds - A rating that indicates that a municipal or corporate bond has a relatively low risk of default. Bond rating firms, such as Standard & Poor's, use different designations consisting of upper- and lower-case letters 'A' and 'B' to identify a bond's credit quality rating. 'AAA' and 'AA' (high credit quality) and 'A' and 'BBB' (medium credit quality) are considered investment grade. Credit ratings for bonds below these designations ('BB', 'B', 'CCC', etc.) are considered low credit quality, and are commonly referred to as "junk bonds".

Global Investment Strategy (GIS) is a division of Wells Fargo Investment Institute, Inc. (WFII). WFII is a registered investment adviser and wholly owned subsidiary of Wells Fargo Bank, N.A., a bank affiliate of Wells Fargo & Company.

The information in this report was prepared by Global Investment Strategy. Opinions represent GIS’ opinion as of the date of this report and are for general information purposes only and are not intended to predict or guarantee the future performance of any individual security, market sector or the markets generally. GIS does not undertake to advise you of any change in its opinions or the information contained in this report. Wells Fargo & Company affiliates may issue reports or have opinions that are inconsistent with, and reach different conclusions from, this report.

The information contained herein constitutes general information and is not directed to, designed for, or individually tailored to, any particular investor or potential investor. This report is not intended to be a client-specific suitability or best interest analysis or recommendation, an offer to participate in any investment, or a recommendation to buy, hold or sell securities. Do not use this report as the sole basis for investment decisions. Do not select an asset class or investment product based on performance alone. Consider all relevant information, including your existing portfolio, investment objectives, risk tolerance, liquidity needs and investment time horizon. The material contained herein has been prepared from sources and data we believe to be reliable but we make no guarantee to its accuracy or completeness.

Wells Fargo Advisors is registered with the U.S. Securities and Exchange Commission and the Financial Industry Regulatory Authority, but is not licensed or registered with any financial services regulatory authority outside of the U.S. Non-U.S. residents who maintain U.S.-based financial services account(s) with Wells Fargo Advisors may not be afforded certain protections conferred by legislation and regulations in their country of residence in respect of any investments, investment transactions or communications made with Wells Fargo Advisors.

Wells Fargo Advisors is a trade name used by Wells Fargo Clearing Services, LLC and Wells Fargo Advisors Financial Network, LLC, Members SIPC, separate registered broker-dealers and non-bank affiliates of Wells Fargo & Company.