Athos Capital Advisors – Monthly Newsletter

September 2023


    • The stock and bond markets continued to sell off in September after a rocky August, marking the worst two-month stretch in the market this year
      • In September, the S&P 500 was down -4.7%, Bonds were down -2.6%, and the 60/40 portfolio was down -3.9%
    • Historically, August and September are the two worst months of the year and October has historically marked the beginning of a better stretch for the stock market
    • Leading the weakness in the markets has been the sharp rise in yield on the 10 year US Treasury
    • Interval funds have continued to be Athos Capital Advisors’ top performing investments and have benefited portfolios by providing high rates of income and steady gains with exceptionally low volatility
      • Both Cliffwater funds have gained 9.2% year-to-date with no daily volatility
    • A big spike in the price of oil has also benefited investments across the Energy sector
    • Just as the “soft landing” narrative became consensus, market participants have begun to seriously question the likelihood of this outcome
  • We think it remains important to stay balanced across portfolios, sticking to long term asset allocation targets, and with a continued emphasis on best-in-class interval funds, high quality equities, select energy investments, and short duration fixed income

Stock and Bond Volatility

The markets have been choppy after a very strong first half of the year. Since the peak on July 31st, the S&P 500 has fallen 6.3%, the Bloomberg US Agg bond index has declined 5.3%, and the 60/40 Balanced Portfolio has fallen 5.2%. Traditional fixed income continues to be a problematic asset class for portfolios – an area we have avoided for two years in favor of Interval Funds.

Spike in 10 Year US Treasury Yield

The 10 Year US Treasury yield, one of the most important instruments in global finance, resumed its march higher over the past two months which in turn put downward pressure on stocks and bonds.

Oil Prices Moving Higher

Oil prices also moved higher during the month, adding fuel to the increase in bond yields and raising the prospect of a resurgence in inflation.  Oil inventories and the United States Strategic Petroleum Reserve remain at very depressed levels after unprecedented withdrawals during 2022. As a result, investments in the Energy sector continued to benefit.

Stock Market Seasonality

August and September traditionally have been challenging periods of the calendar year for the stock market and this year was no exception. Looking forward, the last three months of the calendar year have historically been more benign to investors, especially in years with strong first half performances as evidenced by the second chart.

Stock Market Returns Have Been Concentrated

So far this year, the stock market has been led higher by just a handful of mega-cap technology stocks.  The chart above shows how it has been critical to have exposure to these stocks or to own the indices as a record low percentage of individual stocks have outperformed the index. Additionally, roughly 50% of all Russell 3000 constituents currently trade below their October 2022 lows, further highlighting weakness underneath the handful of stocks powering the market’s move higher.

Interval funds Continue to Outperform

Athos Capital clients continue to benefit from strong performance in three floating rate private credit investments.  We began recommending these investments two years ago and continue to view these as very attractive risk/reward opportunities (  These investments continue to generate consistent returns in a volatile environment, offering low volatility and high income.  Additionally, these investments are generating income at 11% rates and benefit from higher interest rates.  Below is a recent excerpt from Blackstone founder Steven Schwarzman on the asset class.

Hopes of a “Soft Landing”

A “soft landing” economic slowdown, where inflation recedes and the economy slows without a more pronounced slowdown or crash, became the consensus market view two months ago, essentially coinciding with the July 31 peak in the stock market. As the chart above shows, this has been the historical pattern and peaks in “soft landing” news mentions have often peaked just before economic recessions ensued.

Outlook and Positioning

    • It remains important to stay balanced across portfolios, sticking to long term asset allocation targets, and with a continued emphasis on best-in-class interval funds, high quality equities, select energy investments, and short duration fixed income
  • Athos Capital’s Interval Fund lineup continues to generate high rates of income and low volatility with expected returns in the 11% range
  • Traditional fixed income remains challenged – investors should continue to stay at the short end of the yield curve where risk is lowest and yields are the highest
  • Continue to focus on high quality, large cap equities with recurring cash flows and strong balance sheets
  • Select investments in the Energy sector position portfolios to benefit from rising Energy prices

As always, I look forward to hearing from you. 


Henry A. Miketa

President & Founder