2025.Q3 PERFORMANCE
As of September 24, 2025
During the third quarter, most clients’ performance was in line with their benchmarks while ahead for the year to date. Gold (GLD), represented in the Alternative Asset Class, was up 13% for quarter. Our equities lagged SP500 by about 1% but still up nicely as several of our core AI holdings did not add to strong appreciation earlier in the year. In Fixed Income, most clients inched ahead of the Bloomberg Bond Index as Municipal bonds jumped as investors returned to the sector after fears of the loss of tax-exempt interest income disappeared.
The stock market hit new highs in Q3 2025, driven by trade breakthroughs, a Fed rate cut, and strong corporate earnings tied to Artificial Intelligence (AI). In response to the Fed’s actions, investors also moved into short-term bonds, seeking to lock in yields ahead of further rate cuts.
S&P 500 gained 8.2% quarter-to-date, adding to the recovery from April lows. Stocks rebounded after the “Liberation Day” tariff scare, as many countries received extensions and negotiations led to key trade deals. Major deals were made with the EU, UK, and Japan. Negotiations with China are ongoing, and for now, trade has resumed, which has been celebrated by markets.
Adding to these positive developments, the Federal Reserve delivered a widely anticipated rate cut. The Fed Funds Rate was lowered by 0.25% in September, with more reductions expected by year-end. The cut reflects a weakening labor market, adding stress to the Fed’s dual mandate of full employment and stable inflation. Risks to both goals are emerging, as job growth slows and inflation reaccelerates toward 3%.
In anticipation of the beginning of a rate cutting cycle, investors flocked into short-term bonds. This moved the yield on 2-year treasuries from 4% in early August down to 3.6%. This will lower investor return on short term debt, money market yields, and CDs. The 10-year Treasury yield fell from 4.4% to 4.1%. Declining yields increase the value of bonds, resulting in an appreciation of 1.9% for the Bloomberg Bond Index during the quarter. Many client portfolios with diversified bond ladders performed better than this benchmark.
The third catalyst was strong results from corporations. The long-awaited return on AI investments finally seemed to become a reality, as Microsoft, Meta, and others saw strong results from AI products, and gave solid forecasts for future demand. As many of these companies beat their earnings estimates, the stocks jumped higher after reporting. However, the excitement stalled, and the stocks quickly gave back gains, suggesting investors’ expectations were already reflected in the stock price.
Leaders & Laggards
AHIA’s top performing stocks during the third quarter were:
American Superconductor (AMSC): The grid technology and naval defense company led the portfolio with a 70.5% increase. After trimming the position during the quarter, AMSC’s continued growth has put it back as our top holding.
General Electric (GE): GE shares took flight during the quarter, rising 22.7% as the airplane engine manufacturer appears to be further separating itself from competition. GE has developed strong competitive advantages and benefits from high margin repairs on their existing fleet engines.
GE Vernova (GEV): GE Vernona shares continued their surge higher, adding 25% in the quarter. The company delivered strong results in Q2, beating analyst estimates for both revenue and profitability. The company has been ramping up profitability efforts and appears to be executing well.
AHIA’s worst performing stocks during the third quarter were:
EQT (EQT): The natural gas pipeline operator struggled during Q2, falling 8.5% due to declining commodity prices. In addition, a key piece of the investment thesis did not come to fruition as the US has not begun exporting significant amounts of natural gas to Europe.
Costco (COST): Falling only 4.3% during the quarter, Costco was punished mainly for its role as a “Low Volatility” stock. As a consumer staples company, Costco is part of a defensive group, which was shunned by investors during the quarter. Low volatility stocks returned 0.25% in Q3 versus a gain of 13.2% for momentum driven companies
What’s Working and What Isn’t
With the analytical capabilities of our Bloomberg Terminals, we can determine trends of the factors driving equity returns. On a sector basis the best performers year-to-date are Communication Services (+25.9%), Technology (+20.1%), followed by Industrials (+16.3%) and Utilities (+13.6%). The first two are the developers of AI and the second two are building the infrastructure. Only one sector is negative for the year, being Healthcare (-0.6%).
Another way to group performance is by “factor”, which sorts stocks into groups based on certain criteria. The best performing factor is Momentum (stocks that in rising trends), followed by Growth. Some of the worst performers are Low volatility, dividend payers, and value stocks.
Looking at the two together, it is clear that high growth technology adjacent companies are the top performers, and the cheap value stocks (typical of Healthcare companies) are being left behind.
Business of the Quarter Award
ANDREW HILL INVESTMENT ADVISORS, INC. HONORED BY BOARD OF COLLIER COUNTY COMMISSIONERS AS BUSINESS OF THE QUARTER
Andrew Hill Investment Advisors, Inc., a Naples-based investment and wealth management advisory firm that is celebrating its 15th anniversary this year, is proud to announce it has been recognized by the Board of Collier County Commissioners and Greater Naples Chamber of Commerce as Collier County Business of the Quarter.
During an award presentation by the Board on September 23, 2025, Andrew Hill Investment Advisors was recognized for its investments in the community “by volunteering, leadership on various boards, and financial support from the firm and its principals’ personal support.” The boutique investment advisory firm was founded in 2010 by Andrew Hill and Jennifer Figurelli.
“We are delighted to be honored as Collier County Business of the Quarter by the Board of Collier County Commissioners and Greater Naples Chamber of Commerce,” said Hill. “This recognition is especially gratifying as it coincides with our firm’s 15th anniversary.”
Since its inception, the firm has grown the total amount of client assets under management from about $12 million to more than $225 million as of September 1, 2025.
In alignment with this mission, the firm’s principals have been actively involved in the community. Hill sits on the Board of Directors and serves as Chair of the Finance Committee of the Naples Chamber. He also was twice appointed by Gov. Ron Desantis to the Big Cypress Basin Board serving through 2026. Figurelli is a Board member of the Trinity Life Foundation, Inc., a non-profit group that provides guidance for at-risk youth. Figurelli also is a 2015 graduate of the Naples Chamber’s Leadership Collier program.
2025 IRA Required Minimum Distributions
As retirement accounts grow, so do the IRS’s expectations for when you are required to withdraw from them. Required Minimum Distributions (RMD) are mandatory for most tax-deferred retirement accounts. Due to the Secure 2.0 Act, if you were born in 1960 or later, your RMD begins at age 75, starting in 2033. If you turned 73 in 2024 each year moving forward, there will be an annual requirement. Withdrawals from retirement accounts are, in general, taxed as ordinary income. If you’re still working and participating in a workplace retirement plan, you may be able to delay RMD’s until retirement, unless you own more than 5% of a company.
There are several options to best utilize your distribution. If you do not need all or a portion of your RMD, it may be transferred to a non-retirement account or used for charitable causes up to $105,000 in 2025 or may possibly be applied towards college expenses such as a 529 Plan to benefit a grandchild.
If you have not taken your RMD for 2025, please contact our office to specify where you would like the funds to be distributed. Please note the deadline for RMD distributions is December 31, 2025. If we do not hear from you by November 30, 2025, we will process your IRA RMD during the first week of December 2025.
✅ Year-End Tax Planning Checklist for Individual Investors
🏦 Retirement Contributions
- Maximize IRA Contributions (Traditional or Roth): 2025 limit is $7,000 ($8,000 if age 50+).
- Contribute to SEP IRA or Solo 401(k) if self-employed.
- Review 401(k) Contributions: Max out if possible ($23,500 limit for 2025; $31,00 if 50+).
- Consider Roth Conversions: Especially in lower-income years or if expecting higher future tax rates.
💝 Charitable Giving
- Donate Appreciated Securities: Avoid capital gains and get a full deduction.
- Qualified Charitable Distributions (QCDs): If age 70½+, donate up to $108,000 directly from IRA.
- Bunch Contributions: Use donor-advised funds to group donations and exceed the standard deduction.
📊 Investment & Capital Gains
- Harvest Tax Losses: Offset gains with losses; watch for wash-sale rules.
- Review Capital Gains Distributions: Especially from mutual funds.
- Rebalance Portfolio: Align with long-term goals and tax efficiency.
🧾 Income & Deductions
- Defer Income: Delay bonuses or self-employment income to 2026 if beneficial.
- Accelerate Deductions: Pay property taxes, medical expenses, or mortgage interest early.
- Use Flexible Spending Accounts (FSAs): Spend remaining funds before year-end.
🏠 Real Estate & Property
- Review Property Tax Payments: Consider prepaying if itemizing.
- Evaluate Mortgage Interest Deduction: Especially if close to the standard deduction threshold.
👨👩👧👦 Family & Education
- Contribute to 529 Plans: Some states offer deductions or credits.
- Gift Strategically: Use the annual gift tax exclusion ($19,000 per recipient in 2025).
- Review Estate Plans: Update beneficiaries, trusts, and wills.
🧮 Tax Bracket Management
- Estimate 2025 Taxable Income: Consider strategies to stay in a lower bracket.
- Use Tax Credits: Energy-efficient home improvements, education, child tax credits.
If you have any specific questions or would like to discuss a particular strategy, Jennifer or Andy will be happy to have a conversation with you and your tax professional. Keep in mind, our planning advice is general in nature.
The Top 5 Forms of Cyber Scams in 2025
Unfortunately, 2025 has seen a surge in sophisticated scams targeting individuals through text messages, emails, and other digital channels. These scams are not only more convincing but also more damaging—leveraging artificial intelligence, psychological manipulation, and social engineering to exploit victims. The Team at AHIA wants our clients to be educated about these scams because awareness is the first defense.
📱 Text Message Scams (Fake Texts/Smishing)
Smishing—SMS phishing—is one of the fastest-growing threats, with projected losses reaching up to $18 billion annually. These scams work because they create panic and trick users into revealing personal information.
Beware of the following:
- AI-Powered Phishing: Messages crafted by AI mimic legitimate organizations with perfect grammar and tone, making them hard to detect.
- Fake Toll Payments: Texts claim you owe money for tolls and link to fraudulent payment sites.
- Delivery Scams: Impersonating FedEx or UPS, these messages include fake tracking links or images that redirect to phishing sites.
- Bank Alerts: Fraudulent texts warn of suspicious activity and prompt users to verify account details via malicious links.
- Subscription Renewals: Scammers claim your Netflix or Spotify subscription is expiring and ask for payment info.
📧 Email Fraud
Email remains a prime vector for cybercrime. Fraudsters replicate the look and feel of legitimate banking platforms to steal login credentials. Once credentials are entered, scammers gain full access to accounts.
- Spoofed Domains: Emails from domains with low traffic and weak authentication protocols.
- Quarantined Phishing: Messages flagged for hidden text, suspicious links, and spam indicators.
- Compromised Accounts: Tips shared internally emphasize changing passwords and security questions immediately after a breach
🎭 AI-Driven Impersonation & Deepfakes
Scammers now use AI to generate:
- Deepfake Videos & Voices: Mimicking bank reps, celebrities, or government officials to gain trust.
- Fake Profiles: Used in romance scams or employment fraud to lure victims into sharing personal data or money.
- Fake Pop-Ups: These are pop-up messages that often include logos from companies like Microsoft or Apple to prompt users to call a support number. Scammers then gain remote access, install malware, or demand payment for bogus services.
- OTP Bots: These bots mimic legitimate companies and request one-time passwords, allowing scammers to hijack accounts
💔 Romance & Sextortion Scams
These scams involve:
- Building emotional or romantic connections via dating apps or social media.
- Sending AI-generated messages including images or videos to build trust, then request money or explicit content.
- Blackmailing victims with threats to share compromising material unless paid
🧠 Psychological Manipulation
Scammers exploit urgency and fear:
- “Wrong Number” Texts: Seemingly innocent messages that evolve into scams.
- Robocalls with Cloned Voices: AI-generated calls that sound personal and convincing.
- SIM Swapping: Hijacking phone numbers to intercept authentication codes.
🛡️ How to Protect Yourself
- Don’t click on unsolicited links—verify senders independently.
- Use multi-factor authentication (MFA) – prefer app-based over SMS.
- Report suspicious messages to your carrier or the FTC.
- Notify our firm as soon as possible so that we can take the appropriate protective measures through Fidelity.com!
Federal Reserve Action in September
On September 17th, the Federal Reserve (Fed) concluded a two-day meeting and decided to reduce the Fed funds rate by 0.25%, bringing it to a range of 4-4.25%. They also indicated the possibility of an additional 0.5% reduction by the end of the year. Fed Chair Powell explained that the decision to lower interest rates was due to a weakening job market, even though inflation remains slightly above its 2% target. One member of the committee disagreed, preferring a larger 0.5% cut. Looking ahead, the Fed members anticipate another 0.5% cut by the end of 2025.
Inflation hot, Job Market Cooling, Fed sides with Cuts
Today’s Fed action comes as their dual mandates of stable prices and full employment are trending in opposite direction. Inflation indices are trending higher with the CPI (Consumer Price Index) creeping higher for the past five months to 3.1% in August. This is significantly above the Fed’s target inflation rate of 2%.
Conversely to the hot inflation trends, employment trends are cooling. The recent employment report, non-farm payrolls, showed companies are continuing a weak trend of hiring. The three-month moving average of new jobs has fallen from 200,000 in December 2024 to 29,000 in August 2025.
In summary, the Fed is in a difficult predicament with one mandate too hot and the other too cool. It is likely they will side with lowering interest rates further to help the labor market, as it is harder to reverse a weak labor market than it is to correct high inflation.
A Decreasing Number of Publicly Traded Stocks Bodes Well in Supply-Demand Equation, a Factor Pushing Stocks Higher
Over the past three decades, the number of publicly traded U.S. companies has dropped by over 50%, from over 8,000 stocks in the 1990s down to 3,804 in 2024. This decline has been driven by strict regulation, reducing the incentive for corporations to become publicly traded, and the rise of private equity, which invests in promising businesses and keeps them private. This has reshaped the investment landscape. With fewer stocks available, the supply-demand dynamic has shifted in favor of public companies. Now, more investor dollars are chasing a smaller pool of stocks, concentrating cash flows and driving prices higher. This trend is exacerbated by a growing economy that will continue to provide investors with more funds to invest. Simply put, supply is shrinking and demand is growing.
This trend is clearly reflected in the S&P500, where the top 10 companies now represent nearly 40% of the index. If there were more stocks available in the market, the top holdings would likely be more diversified. This concentration has fueled strong returns for these big-name companies, but it comes with the increased risk that when investors sell, they target the same companies.
The results of this decade long trend are still unfolding. AHIA has identified this as a key benefit for our active management style. Finding quality companies with competitive advantages over their peers is now more crucial than ever. A fundamental pillar of our equity research is Technical Analysis, which identifies stocks that are performing well. Typically, investors like to “chase” stocks that have done well in the past, and with fewer options available, it seems likely that the winners will keep on winning.
Asset Allocation: Customizing Portfolios for Individual Circumstances
Most client portfolios are strategically diversified across multiple asset classes, each with distinct risk and return characteristics. The key factor in determining asset allocation is the timing and size of expected withdrawals, often for home repairs or lifestyle expenses. To meet these needs, we typically purchase high-grade bonds with maturities aligned to those future withdrawals. Many clients also value holding these bonds for their predictability of interest income and stability. We customize each client’s bond holdings to be aligned with their expected cash needs in the future.
Moving from the defensive asset class to offensive ones, stocks are often the largest asset category of client portfolios. Stocks have provided high annual returns of over 10% historically, but with wide swings. Thus, stocks are best for holding periods of over five years, not to cover next month’s mortgage payment.
The third asset class is Alternatives, a broad category that includes metals, commodities, and everything else. The goal of alternatives is to generate returns that are uncorrelated with stocks and bonds. Currently, gold represents about 5% of our clients’ portfolios.
With unique client factors being addressed, our analysis shifts to finding the best opportunities within each asset allocation.
Fixed Income: Changing Dynamics after Rate Cut
The recent 0.25% reduction in the Fed Funds rate has led to a decline in most short-term yields, while longer-term bond yields have begun to edge higher. If the Federal Reserve continues with additional rate cuts, we expect short-term rates to fall further, potentially driving long-term rates even higher. Recently, we have been finding income tax free municipal bonds with attractive yields. Since we are a small firm, we can purchase small, or ‘odd lots’ of Muni bonds, such as “37 bonds.” Usually, bond traders don’t like quantities less than 100, so the yields are higher to entice investors, and we take advantage of this.
Recently, we have added a position in a unique niche in the fixed income market. Thanks to Barron’s research, we became educated on catastrophe bonds. Catastrophe or “Cat” bonds are issued by reinsurance companies covering major risks such as large earthquakes or hurricanes. These bonds offer yields significantly above market levels, provided no major events occur. Since Cat bonds are mostly owned by large institutions and hedge funds, we have chosen to use the Victory Pioneer A+ bond fund to capitalize on this niche market. The current yield is over 9%. Interest is paid annually, assuming there is not a material event. In the past 23 years, only in 2022, the year of Hurricane Ian, did the industry not pay interest.
Equity Market Led by AI Buildout in 2025 So Far
Shifting to our outlook for equities, stocks offer moderate upside, but selection is much more important than ever. The SP500 is driven by fewer companies, most of which are related to the AI build out. The equity market offers moderate total return, although the risks of concentration need to be considered.
The AI trends could ultimately be much larger and more impactful than prior innovation trends. Research and automation of routine tasks are already benefiting from AI resources. Many more applications are yet to be invented.
From an investment perspective, investors have already participated in the AI trend for the past 2-3 years. Some stocks are losing their momentum despite excellent financial performance and outlook. Microsoft and Nvidia are good examples of this situation. Neither has traded higher since reporting excellent earnings this summer. The next AI investment phase may be led by second-tier companies. The energy infrastructure required to power data centers is only beginning to take shape. GE Vernova and American Superconductor both are centered on the energy grid and producing power.
After years of being left behind, Google (Alphabet by corporate name) is flexing its AI muscles. A favorable court ruling reduced the risk of a forced break-up. Also, Google’s databases are a gold mine of analytical opportunity to leverage. During the third quarter, we quickly built a position to benefit from the recent run-up.
The AI opportunity is the most dominant theme in our equity strategy. With little else driving the equity market, we are considering the day when the AI music stops. Early indications suggest this may occur in 2026, when power demand exceeds supply creating a supply gap. This gap is expected to grow meaningfully through the end of the decade.
The tariff scares led to many stocks getting hammered over concerns of higher product costs or consumer spending slowing; Yeti stock significantly declined in the spring, creating the window to purchase the stock. Perception of Yeti is that they are a drinkware and cooler company, but the company has evolved into many other product lines, including back packs, chairs, hats, and camping gear. Also, the drinkware line may be reinvigorated by the new sports team logo designs for teams in the NFL, NHL, MLB & NCAA. Yeti received orders for Chicago Cubs, Buffalo Bills (see below) and Toronto Maple Leaf’s tumblers recently. The stock of Yeti offers significant appreciation potential, especially with small cap companies doing better.
The solar industry is seeing rising demand, yet weak investor sentiment has pushed stock prices to attractive, bargain levels. This disconnects between fundamentals and market perception presents a compelling opportunity for long-term investors. The time to construct a solar power plant is about one year compared to a natural gas power plant (Fort Myers FPL plant) that takes three to four years, and nuclear which takes over 10 years. According to Bloomberg research, wind and solar, when paired with battery storage is the cheapest power production, followed by natural gas. Nuclear power is the most expensive but highly reliable. With solar stocks up sharply from the summer lows, our only mistake was not buying more. Solar core positions include NEXTracker and SolarEdge, both firms provide products and software to increase the efficiency of solar systems, not solar panels which is a low margin business.
As the chart below shows, the gap between power demand and supply begins to turn to a deficit next year according to Bloomberg Intelligence projections.
Most of the core holdings are related in some way to technology, and we are underweighting exposure to healthcare and staples sectors. With investor sentiment on the speculative side, high quality stocks offering moderate consistent growth stocks are out of favor. Costco has underperformed the SP500 this year and we sold Sprouts Markets despite very strong financial results. Healthcare stocks are also in the penalty box with investors. The political landscape of cuts to research and policies of the Health and Human Services has clouded the future of healthcare stocks, especially those focused on drug development. We have pared back exposure to the sector but still have a small holding in Vertex Pharma and Stryker. Our largest holding in the healthcare sector is Thermo Fisher Scientific, a leader in spectrometers and analytical instruments used across many industries.
Historically, the fourth quarter begins the strongest period for stocks although it’s a “Tail wind”, not a guarantee. The AI investment cycle is driving most of the stock performance while the economy is slowing. Lower interest rates are another catalyst.
Commodities are Golden
At present, gold via the (GLD) gold ETF is our largest single position at about 5% of most portfolios. We view gold as a hedge against many geopolitical risks. The risk of decreasing Fed independence has sparked a new rally in gold this summer. The rock is now up 43% year-to-date, it’s best year since 1979. This may be a perfect opportunity to buy your holiday jewelry gifts early this year.
Outside of gold, most commodities are declining. Prices for agricultural commodities like corn and soybeans have declined due to abundant supply from excellent growing conditions, while demand remains soft as international buyers turn to buy from Brazil. Oil and natural gas are trending lower as over supply is flooding the market, and with global economies slowing demand is lower than expected. While lower commodity prices are bad for farmers and oil companies’, they translate into lower inflation which benefits consumers.
Update to AHIA Asset Management Agreement (AMA)
It has come to our attention that the tiered fee calculation example on our Asset Management Agreement was inaccurate. The updated version now reads, “***For example, a portfolio value of $3,500,000 in portfolio assets would be as follows: the first $2,000,000 will be billed at an annual rate of 1.00%; and the next $1,500,000 would be billed at 0.80%, subject to negotiation.” This has not impacted the fees to any client accounts; however, we wanted to inform you of this manual typographical error. If you have any questions, please reach out to any member of the AHIA Team.
OUR TEAM
Andrew “Andy”
D. W. Hill, CFA
President and
Co-Founder
Jennifer R.
Figurelli, CTFA
Managing Director
and Co-Founder
Elicha D.
Moore
Client Concierge
Representative
Sean
O'Brien
Associate
Portfolio Manager
