Brookstone Ultra-Short Bond ETF (BAMU US) – Portfolio Construction Methodology

The investment approach shaping the actively managed Brookstone Ultra-Short Bond ETF seeks current income with low interest-rate exposure by investing at least 80% in U.S. Treasuries and investment-grade corporate bonds with 0–2-year maturities, including unaffiliated ETFs that hold such securities. The core emphasizes ultra-short U.S. Treasuries for liquidity and stability, complemented by publicly issued IG corporates and ultra-short bond ETFs to enhance income and maintain tradability. Duration is actively adjusted to the near-term rate outlook and yield-curve shape; security/maturity selection balances carry versus rate sensitivity while preserving high credit quality. Portfolio construction prioritizes capacity and liquidity through large, frequently traded issues and ETF sleeves. Rebalancing is continuous as securities roll down, valuations shift, or curve dynamics change; positions are trimmed or replaced to keep duration and credit exposure within ultra-short parameters and to manage extension/prepayment risks.

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