Aggressive 4-30-23 12-31-22 Commentary 2022 was full of challenges for the global financial markets in both stocks and bonds. It included a bear market in stocks and the worst year in the history of the bond market, with the Bloomberg Aggregate Bond Index falling 13%. Though eSAM Aggressive doesn't have direct exposure to bonds, changes in interest rates and Fed monetary policy does impact the overall investment environment and presents challenges for the stock market and our eSAM Aggressive Account. Adding to volatility in the stock market, both in the US and overseas, the Fed has been aggressively raising interest rates to combat high inflation in part by slowing the economy, including two 0.25% hikes in Q1 and nine times overall since last March totaling 4.75% (ending April). We are close to the end of that process, as inflation has been steadily trending down since the 9.1% peak last June, though at 4.9% (April) it has remained stubbornly above the Fed's 2% target ending. The Fed's aggressive rate hikes that began last March have raised recession risk. Markets are calibrating how much was already discounted in 2022 and how much remains. The answer lies in what type of recession occurs if we indeed enter one. While a soft-landing/shallow recession remains the baseline later this year or 2024, anticipated reverberations of the mini-banking crisis in March have raised risks of a moderate recession. The risk of a severe recession remains low.In February, we further reduced our iShares Edge MSCI USA Quality Factor ETF position, which started in November last year, with proceeds going into Schwab US Dividend Equity ETF, a process that will continue through the year to further concentrate eSAM Aggressive on Core Allocations and continue to support our ultra low-expense mandate to keep eSAM weighted expenses at or under 0.10%. Given the more attractive valuations in stocks created in 2022, we also began scaling out of our defensive iShares Edge Minimum Volatility Global EFT allocation and reallocating back to US stocks in the small-cap SPDR Portfolio S&P 600 ETF and large-cap value Schwab US Dividend Equity ETF, and in March it went into SPDR Portfolio S&P 500 ETF. The last 1% will go to our International allocation as we move closer to a neutral International position given the attractive long-term valuations overseas. [Update]: We expected another 0.25% at the early May Fed meeting, and that is what the Fed delivered with its 10th straight rate hike totaling 5.00%. While a pause is now expected, as recession risks have risen, the market is pricing in one or more interest rate cuts by year-end; however, the Fed is not projecting a rate cut until 2024. Volatility remains in the forecast for the market, including interest rates and bonds, as recession risks remain elevated. We will continue to prudently manage those risks with a long-term focus on diversification and capital appreciation for our eSAM Aggressive Account. All Content is CLIENT APPROVED. Most brochures, guides, and presentations, are in PDF (Adobe Acrobat Reader), Microsoft PowerPoint, or video formats, which may require downloading the applicable program or player to view. Investor Note Mutual Fund and ETF (Exchange Traded Fund) investment strategies, which include investing in specific sectors, foreign securities (both developed and developing markets), high yield securities, or small and medium sized securities may increase the risk and volatility of the funds/sub-accounts. Changes in interest rates may affect the performance of fixed income (bond) funds; if rates increase, bond values decrease and vice versa. Investors should consider the investment objectives, risks, and charges and expenses of the Mutual Fund and/or Variable Annuity carefully before investing.The Mutual Fund and ETF prospectus (and summary prospectus, if available) contains this and other information. Please read carefully before investing. A Mutual Fund and ETF prospectus can be obtained by calling your Nelson Rep at 800-345-7593 or the Mutual Fund and/or ETF company directly. Publisher: Nelson Securities, Inc.Managed Account Insight is published semi-annually by Nelson Securities, Inc., a Registered Investment Advisor. All rights reserved. It is a violation of U.S. copyright laws to duplicate or reproduce any commentary, charts, allocations, or portion of this publication without the written permission of the publisher.Information and historical market data contained within this newsletter are taken from sources we believe to be reliable but, we can not guarantee its accuracy. Nelson Securities, Inc., or the publisher, will not be held responsible for actions taken based wholly or partially on information contained herein. Recommendations are of a time-sensitive nature and not a substitute for a comprehensive plan for investing. Each investor must consider suitability with regard to risk prior to investing.