GL - Artisan Mid Cap Value Fund Q2 2024 Commentary

2024-07-23 11:10:00 ET

Summary

• Following broad market participation that drove US equities higher in late 2023 and early 2024, markets narrowed in Q2, with a handful of mega-cap technology names lifting the S&P 500 Index to all-time highs on the AI FOMO trade.
• Given the meaningful outperformance by large-cap growth stocks, which drove the broad large-cap US indices higher, one might conclude that equity returns have simply followed earnings growth.
• Compared to the Russell Midcap Value Index, our portfolio performance was primarily held back by our health care and consumer discretionary holdings.

Investing Environment

Following broad market participation that drove US equities higher in late 2023 and early 2024, markets narrowed in Q2, with a handful of mega-cap technology names lifting the S&P 500® Index to all-time highs on the AI FOMO (artificial intelligence “fear of missing out”) trade. NVIDIA, Apple and Microsoft alone contributed 85% of the S&P 500®’s 4.28% Q2 return. However, due to the market’s narrow breadth in Q2, the index’s strong headline result was not representative of the average stock’s performance. Most US stocks were in fact negative returners, with the median S&P 500® Index stock down -3.20%. This type of result was in line with the Russell Midcap® Value Index’s -3.40% Q2 return. Most sectors within the Russell Midcap® Value Index were weak. The worst performing were consumer staples, health care and materials—each down about 8%. Exceptions were information technology, utilities and real estate. Given their higher leverage, utilities and real estate were beneficiaries of falling longer-term bond yields as US inflation continues to cool....

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