Portfolio Manager Commentary
Our quarterly letter reviews general market and portfolio trends, followed by more in-depth comments on each portfolio, including performance attribution, new investments, and sector positioning.
Q1 Market and Portfolio Review
In the first quarter of 2026, U.S. equity markets experienced heightened volatility and generally weaker large‑cap returns as investors grappled with a shifting macroeconomic and geopolitical backdrop. Early in the quarter, markets were supported by resilient economic data, solid corporate earnings trends exiting 2025, and expectations that the Federal Reserve would remain accommodative. However, sentiment deteriorated meaningfully as geopolitical tensions escalated late in the quarter, particularly following the U.S.‑led military conflict with Iran and the resulting disruption of global energy supplies through the Strait of Hormuz. The sharp increase in oil prices drove renewed inflation concerns, pushed interest rates higher, and weighed on risk assets overall.
Large cap equities experienced underperformance through the quarter, heavily influenced by the performance of the mega-cap stocks. These stocks, which had driven much of the market’s gains over the prior several years, came under renewed scrutiny in regards to the health of business momentum, capital expenditure acceleration, and valuation concerns. As a result, the Russell 1000 Index declined approximately 4% during the quarter, while the mega‑cap heavy Russell 1000 Growth Index fell nearly 10%, marking one of the weakest relative quarters for large caps since 2022.