SUPN - Aristotle Capital Small/Mid Cap Equity Q2 2024 Commentary

2024-07-18 07:40:00 ET

Summary

• SMID caps gave back some of their first quarter gains with the Russell 2500 index delivering a total return of -4.27%.
• For the second quarter of 2024, the Aristotle Small/Mid Cap Equity Composite generated a total return of -1.83 % net of fees (-1.69 % gross of fees).
• As we look out to the second half of 2024, we are cautiously constructive as encouraging signs of economic stability are balanced by now consensus expectations of a soft landing scenario and the pricing of risk.

Markets Review

SMID caps gave back some of their first quarter gains with the Russell 2500 index delivering a total return of -4.27%. Potential slowing in the US economy weighed on investor sentiment but lent credence to a soft landing scenario in 2024. The Consumer Price Index ('CPI') drifted lower during the quarter, coming in below expectations at 3.0% as inflationary pressures have eased. Employment was muddled during the period as non-farm payroll growth was positive but volatile while unemployment steadily climbed to 4.1%. Despite softening data, the Federal Reserve (Fed) held its ground on easing, at its June meeting, forecasting only one Fed funds rate cut in 2024, down from 3 cuts from its March meeting. The U.S. Treasury yield curve steepened with the yield on the 10-year note rising 16 basis points ('bps') to end June at 4.36%....

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