WBA - Ariel Investments Mid Cap Value Q2 2024 Commentary

2024-08-01 22:40:00 ET

Summary

• Ariel Mid Cap Value Composite dropped -6.19% gross of fees (-6.42% net of fees) in the quarter, underperforming both the Russell Midcap Value and Russell Midcap Indices.
• Several stocks in the portfolio had solid returns in the quarter.
• We did not exit any positions in our mid cap portfolio during the period.

The bull market powered through the second quarter, fueled by investor enthusiasm for artificial intelligence ((AI)) themed stocks. This narrow, momentum-driven, rally helped the S&P 500 eke out a modest gain, even as Mid- and Small-Cap companies declined. The resulting bifurcation has been extreme, as the non-AI companies in the S&P 500 Index lost 1.2%. ¹ This limited market breadth likely reflects weakening economic growth and inflation in the U.S. With many investors cautiously optimistic the Federal Reserve will successfully engineer a soft landing, interest rate cuts may be at hand in the coming months. Still, the turmoil surrounding the U.S. election is becoming a new focal point. Although uncertainty is high and volatility will likely remain elevated, we view these risks as short-term noise within the context of our long-term investment horizon. Against this backdrop, the Ariel Mid Cap Value Composite dropped -6.19% gross of fees (-6.42% net of fees) in the quarter, underperforming both the Russell Midcap Value and Russell Midcap Indices, which returned -3.40% and -3.35%, respectively....

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