Category: Commentaries

The Russell 2500™ Index returned 20.3% in the second quarter of 2026, as robust performance in the Information Technology sector combined with optimism regarding a potential resolution to the conflict in the Middle East.  The outlook for interest rates is moving in an increasingly hawkish direction, as employment levels have been resilient and inflation continues…

Small-cap equities staged a powerful recovery in the second quarter, more than reversing the first quarter’s conflict-driven weakness. Following the cease-fire that was announced after the market close on April 7, risk appetite returned in force and capital continued to concentrate in the AI build-out theme, where semiconductor, high-speed-connectivity, and data-center-infrastructure names posted extraordinary gains…

For 2Q, the Bank Sector Strategy returned 18.04% (gross of fees) and 17.74% (net of fees) vs. the Russell 2000® Value Index Bank Subsector benchmark of 16.17%.  Year-to-date, the Bank Sector Strategy returned 17.97% (gross of fees) and 17.39% (net of fees) vs. the Russell 2000® Value Index Bank Subsector benchmark of 20.67%.  Additional performance can…

Small-cap equities staged a powerful recovery in the second quarter, more than reversing the first quarter’s conflict-driven weakness. Following the cease-fire that was announced after the market close on April 7, risk appetite returned in force and capital continued to concentrate in the AI build-out theme, where semiconductor, high-speed-connectivity, and data-center-infrastructure names posted extraordinary gains…

The Russell 2500™ Index returned 20.3% in the second quarter of 2026, as robust performance in the Information Technology sector combined with optimism regarding a potential resolution to the conflict in the Middle East.  The outlook for interest rates is moving in an increasingly hawkish direction, as employment levels have been resilient and inflation continues…

The Market: U.S. small-cap equities rallied strongly in the second quarter. Oil prices declined as tensions with Iran eased, unwinding much of the first quarter’s spike and removing a key source of uncertainty for the growth outlook. Inflation continued to run above target, keeping pressure on the Federal Reserve, though falling energy prices offered some…

Market Review The second quarter of 2026 was a powerful risk-on rebound from first quarter, with the Russell Microcap® Index gaining 25.6% in the quarter. The rally was primarily driven by strength in artificial-intelligence and semiconductor companies. The macro backdrop stayed complicated: oil, which had spiked in early April as the Iran conflict disrupted supply through…

Market Review The second quarter of 2026 was a powerful risk-on rebound from the first quarter, with the Russell Microcap® Index gaining 25.6% in the quarter. The rally was primarily driven by strength in artificial-intelligence and semiconductor companies. The macro backdrop stayed complicated: oil, which had spiked in early April as the Iran conflict disrupted supply…

U.S. equity markets overcame significant geopolitical headwinds, an oil shock and persistent inflation and interest rate anxieties to deliver a remarkably resilient and robust performance during the first 6 months of 2026.  The S&P 500® composite increased 9.6% for the first 6 months of the year with a total return (including dividends) of 10.2%. Driving…

The Russell Midcap® Value Index (RMV) delivered strong returns in the second quarter of 2026, largely driven by optimism regarding a resolution to the hostilities in the Middle East and remarkably robust absolute performance in the Information Technology sector (up 58.7% in the quarter).  While Tech represented just 15% of the RMV Q2, the sector was…

Equity markets were robust during the 2nd quarter of 2026.  The Russell 2500™ Value (R25V) Index increased 18.50% and the Russell 2500™ Growth (R25G) Index increased 24.02%.  Small caps outperformed large caps, with the Russell 2000® Index up 22.49%, compared to the Russell 1000 Index® up 15.13%. Q2 SMID cap market performance was narrow, with index…

Equity markets were robust during the 2nd quarter of 2026.  The Russell 2000® Value (R2V) Index increased 17.19% and the Russell 2000® Growth (R2G) Index increased 25.71%.  Small caps outperformed large caps, with the Russell 2000® Index up 22.49%, compared to the Russell 1000® Index up 10.33%.  Q2 Small cap market performance was narrow, with index…

Equity market performance was mixed during the 1st quarter of 2026.  The Russell 2000® Value (R2V) Index rose 4.96% while the Russell 2000® Growth (R2G) Index declined 2.81%.  Small caps outperformed large caps over the three-month period, with the Russell 2000® Index up 0.89%, compared to the Russell 1000® Index down 4.18%.  The Kennedy Capital Small…

For 1Q, the Bank Sector Strategy returned -0.05% (gross of fees) and -0.30% (net of fees) vs. the Russell 2000® Value Index Bank Subsector benchmark of 3.88%.  Additional performance can be found in the table below. Data as of 03/31/2026 2026 started out with optimism in the banking sector which was reinforced in our numerous management…

The Russell 2500™ Index returned 2.04% in the first quarter of 2026, as a strong start to the year was largely offset by the market sell-off in March tied to the conflict in the Middle East.  While this situation is inherently unpredictable, it could pressure consumer spending and has created an environment that constrains the potential…

Market Review The Russell Microcap® Index returned 1.49% in the first quarter of 2026, outperforming the (4.33)% decline in the S&P 500® and also outperforming the Russell 2000® small cap index.  Solid performance from microcap equities early in the year was largely reversed by a nearly 5% decline in the benchmark during March, as geopolitical and…

Market Review The Russell Microcap® Index returned 1.49% in the first quarter of 2026, outperforming the (4.98)% decline in the S&P 500® and also outperforming the Russell 2000® small cap index.  Solid performance from microcap equities early in the year was largely reversed by a nearly 5% decline in the benchmark during March, as geopolitical and…

Equity markets delivered mixed returns in the first quarter of 2026, with the S&P 500® declining >4%, the Russell 2000® index up modestly and the Russell Midcap Value (RMV) Index up 3.68%.  Solid absolute returns in January and February were somewhat offset by a sell-off in March associated with the effects of the conflict in the…

The Russell 2500™ Index returned 2.04% in the first quarter of 2026, as a strong start to the year was largely offset by the market sell-off in March tied to the conflict in the Middle East.  While this situation is inherently unpredictable, it could pressure consumer spending and has created an environment that constrains the potential…

Equity markets generated positive returns in the 4th quarter of 2025.  The Russell 2500™ Value (R25V) Index rose 3.15%, the Russell 2500™ Growth (R25G) Index was up 0.33%, and the S&P 500® Index (S&P) rose 2.66%. Equity market performance was mixed during the 1st quarter of 2026.  The Russell 2500™ Value (R25V) Index rose 4.77% while the…

Following a robust U.S. equity market performance in 2025 that was led by technology and large capitalization stocks, the first two months of the year began with a fairly strong rotation into value and small capitalization stocks . . . which was interrupted on February 27, 2026, by the shock of airstrikes on Iran by…

The Market: U.S. small-cap equities rallied early in the first quarter before reversing late in the period and ending modestly higher. As we entered 2026, stable inflation, lower interest rate expectations, resilient employment, and positive indicators for broad industrial demand growth supported a favorable backdrop for stocks. That environment was particularly supportive for smaller companies,…

Following a robust U.S. equity market performance in 2025 that was led by technology and large capitalization stocks, the first two months of the year began with a fairly strong rotation into value and small capitalization stocks . . . which was interrupted on February 27, 2026, by the shock of airstrikes on Iran by…

US stocks continued to lift higher during 2025 with the S&P 500® up more than 16% for the year. The strong year capped off a solid 3-year run of nearly 80% appreciation since the start of 2023. The strong year started out unsettled as Trump’s “Liberation Day Tariffs” in early April pushed the S&P 500®…

Artificial intelligence and political policy (e.g., tariffs, regulation, defense funding, immigration, Fed policy) continued to dominate business headlines and fuel market volatility. While at the same time, resilient consumer spending and increasing capital investments underpinned the ongoing earnings growth of public companies. The result has been equity markets that continue to grind higher despite underlying…

The Market: U.S. small-cap equities experienced a volatile fourth quarter but finished the period higher and ended the year up double digits overall. That outcome came amid a mixed policy backdrop, including the reopening of the U.S. government following a shutdown and continued interest rate cuts by the Federal Reserve, extending the easing cycle that…

Artificial intelligence and political policy (e.g., tariffs, regulation, defense funding, immigration, Fed policy) continued to dominate business headlines and fuel market volatility. While at the same time resilient consumer spending and increasing capital investments underpinned the ongoing earnings growth of public companies. The result has been equity markets that continue to grind higher despite underlying…

Equity markets generated positive returns in the 4th quarter of 2025.  The Russell 2500™ Value (R25V) Index rose 3.15%, the Russell 2500™ Growth (R25G) Index was up 0.33%, and the S&P 500® Index (S&P) rose 2.66%. Small and mid-cap equities generated steady performance in Q4 despite concerns around the impact of the government shutdown and softening…

The Russell 2500™ Index returned 2.22% in the fourth quarter of 2025 and 11.91% for the full year. This solid performance reflected a combination of easing U.S. monetary policy, fiscal stimulus associated with recently enacted legislation, and continued strength in labor market conditions. Sector-level returns within the index were mixed during the quarter. Health Care…

Equity markets generated positive returns in the 4th quarter of 2025, with the Russell Midcap® Value (RMV) Index up 1.42%.  On a full year 2025 basis, the index returned 11.05%.  The Kennedy Capital Mid Cap Value (MCV) composite declined 1.07% (net of fees) during the quarter, trailing the RMV by 248 bps.  Additional performance information is…

Market Review The Russell Microcap® Index returned nearly 23% in 2025, outperforming both large and small cap US equity indices during the year (see Figure 1).  The underpinnings of this robust performance were concentrated in early-stage businesses, with Biotech/Pharma contributing 10.2 ppts (approx. 44% of the total return) while a group of 9 companies tied to…

Market Review The Russell Microcap® Index returned nearly 23% in 2025, outperforming both large and small cap US equity indices during the year (see Figure 1).  The underpinnings of this robust performance were concentrated in early-stage businesses, with Biotech/Pharma contributing 10.2 ppts (~44% of the total return) while a group of 9 companies tied to…

The Russell 2500™ Index returned 2.22% in the fourth quarter of 2025 and 11.91% for the full year. This solid performance reflected a combination of easing U.S. monetary policy, fiscal stimulus associated with recently enacted legislation, and continued strength in labor market conditions. Sector-level returns within the index were mixed during the quarter. Health Care…

For 4Q, the Bank Sector Strategy returned 4.72% (gross of fees) and 4.46% (net of fees) vs. the Russell 2000® Value Index Bank Subsector benchmark of 3.61%.  Year-to-date, the Bank Sector Strategy has returned 13.85% (gross of fees) and 12.72% (net of fees) vs. the Russell 2000® Value Index Bank Subsector benchmark of 8.84%.  Additional performance…

Equity markets generated positive returns in the 4th quarter of 2025.  The Russell 2000® Value (R2V) Index rose 3.26%, the Russell 2000® Growth (R2G) Index was up 1.22%, and the S&P 500® Index (S&P) rose 2.66%.  Small cap equities generated steady performance in Q4 despite concerns around the impact of the government shutdown and softening labor…

For 3Q, the Bank Sector Strategy returned 9.60% (gross of fees) and 9.33% (net of fees) vs. the Russell 2000® Value Index Bank Subsector benchmark of 6.70%.  Year-to-date the Bank Sector Strategy has returned 8.72% (gross of fees) and 7.91% (net of fees) vs. the Russell 2000® Value Index Bank Subsector benchmark of 5.05%.  Additional performance…

Small-capitalization stock performance was robust in the third quarter, both absolutely and relatively, with the Russell 2500™ Index +9.00%, the Russell 2000® Index +12.39% and the Russell Microcap® Index +17.03% vs. the Russell 1000 +7.99%. However, it was a very difficult period for active managers to keep up and deeper analysis highlights the primary reasons why:…

Small-capitalization stock performance was robust in the third quarter, both absolutely and relatively, with the Russell 2000® Index +12.39% and the Russell Microcap® Index +17.03% vs. the Russell 1000® +7.99%. However, it was a very difficult period for active managers to keep up and deeper analysis highlights the primary reasons why: the outperformance delta between individual…

The Russell 2500™ Index returned 9.00% in the third quarter of 2025, as ongoing optimism regarding the impact of artificial intelligence investments and a recovery in the Health Care sector drove stocks higher.  10 of the 11 benchmark sectors generated a positive return during the quarter.  The best absolute performance was generated by Information Technology…

The Russell 2500™ Index returned 9.00% in the third quarter of 2025, as ongoing optimism regarding the impact of artificial intelligence investments and a recovery in the Health Care sector drove stocks higher.   10 of the 11 benchmark sectors generated a positive return during the quarter.  The best absolute performance was generated by Information Technology +14.47%…