Aristotle Small Cap Equity Q1 2025 Commentary

2025-04-14 15:40:00 ET

Summary

• For Q1 2025, Aristotle Small Cap Equity Composite posted a total return of -7.34% net of fees (-7.20% gross of fees), beating the -9.48% total return of the Russell 2000 Index.
• The volatility observed throughout 2024 persisted into the first quarter of 2025.
• We continue to remain optimistic about the long-term potential for the small-cap segment of the U.S. market.

Markets Review

The volatility observed throughout 2024 persisted into the first quarter of 2025. The Russell 2000 Index approached correction territory with a loss of -9.48% for the quarter, following a solid 2024 with the index returning 11.54%. After a moderately positive start to the quarter, February and March were a more challenging market environment due to uncertainty surrounding the precise parameters and implementation of the new administration’s policies, geopolitical tensions and a higher for longer rate environment. Continued economic growth, a stable labor market and firmer inflation data kept the Federal Reserve (Fed) on the more hawkish course they took in December. Chairman Powell held rates steady at the March FOMC meeting and indicated the Fed will maintain a more measured approach going forward, updating their economic projections and forecasts to two rate cuts in 2025....

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