REZI - Ariel Investments Focused Value Q1 2024 Commentary

2024-06-25 12:35:00 ET

Summary

• Ariel Investments, LLC is a global value-based asset management firm founded four decades ago in 1983. Ariel serves individual and institutional investors through five no-load mutual funds and eleven separate account strategies.
• Ariel Focused Value Composite earned +7.52% gross of fees in the quarter, underperforming both the Russell 1000 Value Index and the S&P 500 Index, which returned +8.99% and +10.56%, respectively.
• Phinia traded up in the period on solid earnings results and a positive full year 2024 outlook.
• We also repurchased former holding and leading manufacturer of consumer food products, J.M. Smucker after the market reacted negatively to the company’s recent acquisition of snack-maker Hostess.

U.S. indices continued to exceed expectations in the first quarter. Investor enthusiasm around artificial intelligence ((AI)), resilient corporate earnings growth, falling inflation and expectations for interest rate cuts this year drove a broad-based rally. While momentum was the largest driver of performance across size and style, all sectors in the S&P 500, except real estate, posted gains. Fears of a recession have been replaced with optimism and bullish market sentiment. Such turns in market psychology and economic forecasts highlight the challenges of market timing and the importance of taking a long-term view. Although exuberance, particularly for AI-themed mega-cap stocks may eventually prove to be excessive, the patient investor knows stock prices trade on fundamentals. Against this backdrop, the Ariel Focused Value Composite earned +7.52% gross of fees (+7.35% net of fees) in the quarter, underperforming both the Russell 1000 Value Index and the S&P 500 Index, which returned +8.99% and +10.56%, respectively....

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