October 2025 Newsletter

Dear Clients and Friends,

We hope you are enjoying the end of summer and beautiful fall colors. As your dedicated partner in navigating today's financial landscape, we’re here to keep you ahead of the curve with timely market insights, forward-thinking investment strategies, and tailored financial guidance—all with your unique goals in mind. In that vein, this month's newsletter will describe current market conditions, allocation changes that will occur in the next few weeks, and describe the concept of a virtual family office that many of you have been asking us about over the last few months.

Market Conditions

Despite an eventful spring marked by temporary spikes in market turbulence, the stock market has maintained record-setting levels and stability in recent months. The chart below highlights the brief surge in volatility during March, April, and May, followed by a steady return to the calm we see today.

Now while we don't know what the 4th quarter of 2025 will bring, it is likely there will be some increased volatility ahead given the historical prevalence of periods of market decline, shown in the chart below.

So while we expect this volatility in the stock market, we believe it will remain the growth engine of our portfolios and be stabilized with our bond and alternative investments which have performed very well this year.

Allocation Changes

In the coming weeks you will see some small changes in our stock allocation. So far for the year our stock model has returned just shy of 16%, bolstered by our overweighting in technology funds and individual stocks. The S&P 500 is at 13% for comparison. 

We remain committed to staying allocated to areas where growth is coming from and will add a few new positions to your portfolios in the coming weeks. The first is an individual stock named Broadcom which trades under the ticker symbol AVGO. Broadcom is a semi-conductor company that we believe is well positioned to support the growth in the AI space alongside other names we have owned for years like Nvidia and Oracle. 

We will also be adding a new fund that trades under the symbol of DFII. This is a bitcoin strategy that has a target income of 15% above the annual income yield of one-month U.S. Treasury Securities (so about 19% currently). This fund will also try to capture the price performance of bitcoin up to 80%, buffered by the yield. Because of the inherent price volatility of bitcoin, this fund will have a relatively small percentage allocation but should provide meaningful income regardless off the price direction of bitcoin. 

We will be eliminating our energy specific fund FXN to allow space for these new additions. This fund served the purpose of generating attractive yield while capturing exposure to a sector we believed would outperform in the current economic cycle. However, we believe the opportunity cost for this fund is now too high given the potential we see in DFII and AVGO.

Virtual Family Office

As we have engaged in more advanced tax and estate planning conversations, the topic of the virtual family office structure has become more and more prevalent. So we thought it would be helpful to put together some information that can be referenced regarding this advanced wealth management structure. 

Virtual Family Office: Provides a comprehensive, holistic approach to managing the financial and non-financial needs of ultra-high-net-worth individuals or families, typically those with a high potential for a taxable estate. Services generally extend beyond investments to include:

• Financial planning and investment management
• Tax planning and compliance
• Estate planning and trust administration
• Philanthropic strategy
• Family governance and succession planning
• Lifestyle services (e.g., managing properties, private travel, or concierge services)
• Risk management and legal coordination

A virtual family office outsources many of these services to specialists while coordinating them under a single, centralized platform, unlike a traditional family office that may have in-house staff. 

Our team here at Bauer Heitzmann has been putting together Virtual Family Office capabilities for the last few years so that we can provide this valuable service to our clients. 

We deeply appreciate your ongoing confidence in our team as your trusted wealth management partner. We’re excited to continue exploring innovative planning strategies tailored to your individual needs and goals.

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Warm regards,

The Bauer Heitzmann Team

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