PI - Carillon Eagle Small Cap Growth Fund Q4 2024 Commentary

2025-02-27 21:09:00 ET

Summary

• Small-cap stocks posted mixed and underwhelming results in the fourth quarter as they fell short of their strong rebound in the previous quarter.
• Communication services (up 9.66%) underperformed its value-oriented counterparts, while healthcare (up 3.13%) avoided the same losses as its value-related constituents.
• Potential changes in government policies will be closely monitored, posing some notable risks as tariffs and deportations could re-ignite inflationary pressures.

Market Overview

Small-cap stocks posted mixed and underwhelming results in the fourth quarter as they fell short of their strong rebound in the previous quarter. Among the style indexes, the Russell 2000® Growth Index (up 1.70%) reversed course and outpaced the Russell 2000® Value Index (down 1.07%), finishing with positive gains while the value index ended in negative territory. Information technology (up 9.60%) was the best-performing sector, although it modestly underperformed its value counterpart. In contrast, communication services (up 6.75%) avoided the negative returns seen by its value-oriented peers. After lagging the overall growth benchmark last quarter, industrials (up 5.35%) and financials (up 5.21%) contributed meaningful returns. Consumer staples (up 5.07%) underperformed related constituents in the value benchmark, unlike consumer discretionary (up 3.74%) where value-oriented peers in the same sector finished in the red. Energy (down 2.77%), utilities (down 4.71%), materials (down 5.25%), and healthcare (down 7.74%) finished in negative territory, lagging overall benchmark returns. After leading all other sectors last quarter, real estate (down 8.24%) was pressured, detracting the most from overall performance.

Small caps had another strong year in 2024, with the Russell 2000 Growth Index (up 15.14%) nearly matching last year’s impressive results and once again surpassing the gains of the Russell 2000 Value Index (up 8.04%), which declined on an annual basis. Consumer staples (up 30.62%) and information technology (up 28.77%) stood out as leaders, both in their absolute contribution to overall index returns and in their relative performance against their value-oriented counterparts. Industrials (up 21.11%) and financials (up 18.29%) also outperformed, though to a lesser extent. Consumer discretionary (up 14.07%) notably outperformed its value peers but fell short of the overall index return....

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