[1] With earnings growth greater than 10%, the GP strategy will maintain base positioning and rebalance back to targets in early October 2026.
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Globally diversified core strategy based on the Global Perspectives unique investment philosophy and built with a mix of passively managed ETFs.
Key takeaways
Market review
Global markets faced a more difficult backdrop during the third quarter as rising oil prices and bond yields challenged strong earnings and improving business activity. Renewed Middle East hostilities added to inflation concerns, while the U.S. Federal Reserve's September rate increase reinforced expectations for tighter monetary policy. Equity valuations contracted across developed markets, and rising fuel and mortgage costs pressured U.S. households.
Within equities, U.S. large cap stocks advanced while smaller companies declined, reversing the previous quarter's broader leadership. Large cap value outperformed as investors increasingly favored cash generation and balance-sheet strength over momentum and higher risk exposures. Energy led sector performance, while software gains contrasted with semiconductor weakness and concerns about artificial intelligence spending. Earnings estimates continued to rise, but valuation declines overwhelmed that support in smaller companies. Developed international and emerging market (EM) equities were mixed, with substantial variation across countries.
Fixed income markets posted negative returns, with Treasury yields rising sharply across the curve. Core bonds and inflation-protected securities lost ground as higher rates outweighed income. Shorter-duration exposures were better insulated, while high yield bonds and leveraged loans supported results within diversified fixed-income allocations. Listed real estate struggled as higher rates increased financing costs and pressured valuations.
Portfolio review
The Voya GPMM ETF Series posted negative absolute and relative returns.
The Models were in base positioning during the period. Asset allocation was a detractor from relative performance for most of the portfolios. For Income, overweights to mortgage back securities and core bonds were the main detractors as rising rates drove broad fixed income losses. In Aggressive, Moderate, and Conservative Growth portfolios, the primary asset allocation detractors were the overweights to U.S. small cap, real estate investment trusts (REITs) and U.S. mid cap equities as smaller-cap stocks lagged large caps and listed real estate came under pressure from higher yields. Overweights to high yield and short-term bonds were the main contributors, supported by their relatively short durations.
The Voya GPMM ETF Models are comprised of passive index ETFs. The ETFs may not perfectly track the performance of the underlying asset class benchmarks. During the quarter, Index funds’ return differences detracted from performance.
For the quarter ending June 30, 2026 —actual company reporting finishing in September 2026 —the year over year earnings growth for the S&P 500 companies was 53.7%.
Outlook
Growth remains resilient, but capital has become more expensive. AI infrastructure, energy security, defense spending, and reshoring support investment, while stronger nominal growth, fiscal concerns, and sticky inflation are pressuring yields higher. U.S. activity remains supported by resilient consumption and a low-hire, low-fire labor market, though constrained labor supply complicates the inflation outlook. Moderating shelter costs and fading tariff effects should help ease inflationary pressures. Supply chain relocation creates opportunities, while geopolitical, trade, and energy risks leave less margin for error.
Within equities, we remain modestly overweight and favor the United States, where strong earnings support our constructive view despite narrow market participation. Broader profit growth would make the advance more durable, but higher yields and demanding valuations raise the bar for returns. We favor high-quality large cap businesses with durable cash flows and the ability to self-fund investment. Markets are pricing an optimistic AI outcome in which revenues scale fast enough to justify elevated capital expenditures, preserve margins, and keep the buildout funded. We think that is plausible, but worth diversifying around. Weaker earnings revisions or deteriorating AI spending would warrant greater caution.
Outside the U.S., distinct earnings drivers matter more than cheaper valuations alone. We remain neutral on developed international equities, with a preference for Japan given governance reforms, improving capital allocation, and focus on shareholder returns. Europe offers selective defense, infrastructure, and financial opportunities, tempered by energy sensitivity and fiscal risks. Our modest EM overweight favors Asia’s semiconductor and hardware leadership, alongside India’s domestic growth and supply-chain relocation. Concentration and overlap with U.S. AI exposure increase the importance of manager selection. China’s manufacturing and export strength remain clear positives, but weak domestic demand limits the case for a broad recovery.
In fixed income, higher yields restore meaningful income and diversification potential, but duration is not an all weather hedge. We favor intermediate-duration U.S. core bonds, including Treasuries, agencies, and high-quality securitized and investment grade credit. These provide income and flexibility if growth weakens without excessive long-end exposure. Tight spreads favor quality over lower rated credit, while currency volatility, fiscal uncertainty, and a firm dollar reinforce caution on non-U.S. bonds.
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