| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | - | - |
Q2 2026 delivered a sharp reversal from Q1, with the S&P 500 rising 14.9%, its best quarterly gain in six years, driven by renewed momentum in the AI trade and semiconductor demand. Technology surged 31.6%, its strongest quarter since Q4 2001, led by a 49.5% gain in semiconductors, while Energy reversed sharply, declining 13.5% as oil prices fell on easing geopolitical tensions. Market leadership narrowed meaningfully, with the percentage of stocks outperforming the index falling to its second-lowest reading on record, highlighting increased concentration in large-cap names. Emerging Markets led global equities with a 23.4% gain, driven by semiconductor strength in South Korea and Taiwan, though China lagged significantly. The Federal Reserve under new Chairman Warsh signaled a decisively hawkish pivot, with inflation reaching 4.1% in May and expectations for at least one rate hike this year. While historical patterns suggest further upside following strong quarterly gains, the backdrop is becoming more complex, with past tightening cycles showing muted returns and increased volatility. Commodity markets weakened as shorter-term trends deteriorated, though longer-term uptrends remain intact. The environment remains highly differentiated, with leadership concentrated in select sectors and regions, requiring careful navigation as macro uncertainty increases.
Q2 2026 marked a sharp reversal from Q1, with the S&P 500 rising 14.9% driven by a resurgent AI trade and semiconductor strength, though leadership narrowed significantly with concentration in large-cap Technology names while Energy reversed sharply on falling oil prices.
The backdrop is becoming more complex as investors look ahead to a potentially more hawkish Federal Reserve, with expectations for rate hikes introducing uncertainty. While historical patterns suggest further upside following strong quarterly gains, past tightening cycles have shown muted returns and increased volatility. The environment remains highly differentiated, with leadership concentrated in select sectors and regions, particularly semiconductors and AI-related names. Commodity markets face a more fragile setup as shorter-term trends weaken, though longer-term uptrends remain intact. Overall, the market reflects a transition from broad strength to a more selective environment requiring careful navigation.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jul 9 2026 | 2026 Q2 | - | AI, commodities, emerging markets, energy, Federal Reserve, inflation, semiconductors, technology | - | Q2 2026 saw the S&P 500 surge 14.9%, its best quarter in six years, driven by AI and semiconductor strength, with Technology up 31.6% and semiconductors gaining 49.5%. Energy reversed sharply, falling 13.5% on declining oil prices. Market leadership narrowed to record lows despite strong headline returns. Emerging Markets led globally, up 23.4%, while a hawkish Fed pivot on rising inflation introduces uncertainty ahead. |
| Apr 8 2026 | 2026 Q1 | CVX, XOM | commodities, energy, Geopolitical, inflation, Iran, oil, value | - | Q1 2026 delivered a stark Value rotation as Iran conflict drove oil up 77% and Energy to multi-decade highs. Growth stocks collapsed while defensive sectors gained amid stagflation fears. Commodities extended their bull run with broad-based strength. Fed rate cuts now delayed, creating challenging backdrop for equities despite recent resilience. |
| Jan 16 2026 | 2025 Q4 | - | Fed, growth, inflation, international, rates, Sectors, value | - | Q4 2025 marked a notable rotation from Growth to Value leadership as equities continued outperforming other asset classes. International markets led U.S. benchmarks while sector performance broadened beyond mega-cap technology. Fed rate cuts and easing financial conditions supported markets, with cyclical Value sectors positioned to benefit from continued economic momentum and monetary easing in 2026. |
| Oct 14 2025 | 2025 Q3 | AAPL, GOOGL, NVDA, TSLA | AI, emerging markets, gold, growth, liquidity, semiconductors, small caps, technology | - | Strong Q3 rally driven by liquidity and mega-cap technology leadership despite stretched valuations and softening labor markets. Emerging markets led global gains with China up 19% while gold surged 127%. Fed resumed rate cuts as unemployment rose to 4.3%. Firm increasing emerging markets exposure amid cautious optimism for year-end momentum. |
| Apr 8 2025 | 2025 Q1 | DPLM.L, HARV.HE, LOTB.BR, POOL | Compounding, growth, Quality, Roiic, value | - | The Compounding Tortoise focuses on sustainable quality compounding, delivering +10.08% year-to-date through companies with high returns on incremental invested capital. The fully invested portfolio emphasizes strong free cash flow generation and rational capital allocation over financial engineering, targeting double-digit returns despite FX headwinds and tariff uncertainty. |
| Jan 9 2025 | 2024 Q4 | - | compounders, growth, long-term, Quality, volatility | - | Quality-focused manager delivered 4.21% in volatile Q1 2025, maintaining discipline amid tariff uncertainty and market noise. Portfolio companies showed 15% EBITA growth in 2024, demonstrating resilience through cycles. Strategy emphasizes deeper research on existing high-quality compounders rather than new acquisitions, focusing on long-term business fundamentals over short-term volatility. |
| Oct 9 2024 | 2024 Q3 | AOR, BND, SPY, VEA, VWO | Diversified, Elections, ETFs, Fed policy, Recession, risk management, Technical Analysis | - | Stonehearth delivered strong Q3 returns using systematic risk management and Fed policy analysis. With rate cuts beginning and recession probability at only 13.8%, technical indicators support their overweight equity positioning. Their 49-indicator risk model turned bullish during the quarter, confirming current allocation strategy across diversified portfolios. |
| Jul 11 2024 | 2024 Q2 | BND, VOO, VXUS | AI, Bonds, healthcare, interest rates, international, technology | - | Miller Wealth Management reports solid Q3 performance with U.S. stocks up 5.89% and international markets gaining 7.28%. AI enthusiasm continues driving tech sector gains while Fed rate cuts support bonds. Despite monitoring global conflicts, tariffs, and AI disruption, the firm emphasizes maintaining consistent investment convictions through changing market conditions. |
| Apr 12 2024 | 2024 Q1 | - | AI, defense, energy, inflation, technology, Trade Policy | - | Markets recovered from April tariff-driven selloffs to hit all-time highs by quarter-end. Six key drivers support performance despite geopolitical uncertainty: AI boom, energy sector growth, medical advances, strong consumer spending, NATO defense spending, and tight labor markets. Manager watches Fed policy, tariff negotiations, and new federal legislation impacts while maintaining disciplined investment approach. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q2 |
Semiconductor CycleSemiconductors led Q2 with a 49.5% gain, driven by AI trade momentum and outsized moves in Micron, AMD, and Intel. Technology sector rose 31.6%, its best quarterly gain since Q4 2001, supported by renewed AI-related spending and semiconductor demand. South Korea and Taiwan were top-performing markets, driven by semiconductor strength. |
AI Semiconductors Technology Taiwan South Korea |
AIThe AI trade regained momentum in Q2, pushing Technology, Nasdaq, and broader indices to new highs. AI-related spending drove semiconductor demand and Technology sector outperformance. However, within Technology, Software and IT Services declined 20-25% respectively amid concerns around AI disruption, showing divergent impacts. |
Technology Semiconductors Software Disruption | |
OilWTI posted its steepest decline since Q3 2022, with Energy declining 13.5% in Q2 after being the top performer in Q1. Crude prices fell on easing geopolitical tensions and progress in U.S. and Iran negotiations. Falling oil prices weighed heavily on commodities given the energy-heavy composition of the S&P GSCI Index. |
Energy Commodities Geopolitical Iran | |
InflationInflation accelerated through the first half of 2026, with headline PCE reaching 4.1% in May and core rising to 3.4%, both the highest levels since 2023. Elevated energy prices following geopolitical disruptions contributed to the increase, though easing oil prices late in the quarter suggest inflation may have peaked. Inflation is expected to remain elevated near 3.5% in the second half. |
PCE Federal Reserve Energy Rates | |
RatesThe Federal Reserve under new Chairman Warsh signaled a decisively hawkish pivot, revising 2026 inflation forecasts higher and indicating at least one rate hike this year. Expectations for rate hikes later in the year introduce uncertainty, with past tightening cycles showing muted returns and volatility. Real policy rates remain near neutral, supported by still-loose financial conditions, suggesting the Fed retains flexibility to tighten without immediately derailing growth. |
Federal Reserve Inflation Monetary Policy Volatility | |
Emerging MarketsEmerging Markets led global equities, gaining 23.4% in Q2 and 25.6% year to date, driven largely by semiconductor strength in South Korea and Taiwan. Emerging market debt was the best performing fixed income sector at 3.4%, driven by robust risk appetite, favorable macroeconomic conditions, and strong performance by EM high yield debt. However, China lagged significantly, falling 7.8% in Q2 and 15.7% for the first half, weighed down by weak domestic demand. |
South Korea Taiwan China Semiconductors Debt | |
CommoditiesThe S&P GSCI Index declined 16.87% in Q2 as shorter-term trends weakened. Commodity breadth deteriorated, with fewer assets maintaining upward momentum. The index remains above its 200-day moving average, indicating the longer-term uptrend is intact, but has slipped below key shorter-term averages. While global liquidity remains supportive, the peak in central bank easing breadth appears to have passed. Increasingly pessimistic sentiment suggests potential for a near-term rebound, but confirmation would require stabilization in breadth. |
Oil Energy Liquidity Central Banks | |
Risk AppetiteRisk appetite improved in Q2 with the S&P 500 rising 14.9%, its best quarterly gain in six years. Credit outperformed in fixed income, led by emerging market debt, high yield, and leveraged loans. However, market leadership narrowed meaningfully, with the percentage of stocks outperforming the index falling to its second-lowest reading on record. Median stock correlation to the S&P 500 dropped to 0.21, the third-lowest level since 1972, reflecting elevated dispersion despite strong headline returns. |
Credit High Yield Dispersion Breadth | |
| 2026 Q1 |
OilWest Texas Intermediate crude surged more than 50% in March and gained 77% in Q1 due to the Iran conflict and Middle East disruptions. Energy was the clear standout sector with its second strongest performance since 1972. Crude's path hinges on how long the Iranian conflict persists and how long the Strait of Hormuz remains closed. |
Energy Crude Iran Geopolitical Inflation |
ValueValue stocks outperformed growth across all market caps during Q1, with leadership shifting toward Value-oriented sectors including Materials, Utilities, Consumer Staples, Industrials, and Real Estate. Large-cap growth stocks were hit especially hard, with the Russell 1000 Growth dropping 9.9%, one of the poorest performances relative to value since 1979. |
Growth Rotation Defensive Inflation Rates | |
CommoditiesCommodities were up 8.3% in March, the eighth straight month of gains of more than 7%. The asset class appears to be in a maturing but still intact secular bull market, with important divergences across sectors. March delivered the strongest commodity breadth in over a year as 76% of commodities tracked posted gains. |
Bull Market Breadth Inflation Energy Metals | |
InflationHigher oil prices threaten to lift inflation across major economies, with historically a 10% rise in oil prices adding about 0.1 to 0.2 percentage points to inflation. This compounds affordability challenges and could lead to stagflationary environment, causing the Federal Reserve to remain cautious and delay rate cuts. |
Oil Stagflation Rates Fed Growth | |
| 2025 Q4 |
TechnologyThe Fund invests at least 80% of net assets in technology companies across multiple sub-industries including IT consulting, internet services, application software, communications equipment, semiconductors, and interactive media. The portfolio focuses on companies with sector-leading cash flows, attractive valuations, and sustainable profitability prospects. |
Software Hardware Semiconductors Internet Communications |
| 2025 Q3 |
AITechnology giants drove market concentration to record levels with mega-cap strength defining the quarter. Utilities performed well supported by continued investment in artificial intelligence infrastructure. Information Technology led gains in multiple regions including China, Taiwan, and South Korea. |
Technology Infrastructure Semiconductors Data Centers Cloud |
GoldMetals and Mining led all industries with a 127% surge in Gold driving performance. South Africa advanced 16.0% led by Metals & Mining sector. Steel and Copper also posted strong advances alongside gold's exceptional performance. |
Gold Metals Mining Commodities Steel | |
Emerging MarketsEmerging markets led global equity gains climbing 11.6% and contributing nine of the top ten performing markets in Q3. China gained 19.1% for the quarter and 38.3% year-to-date. The document notes increasing emerging markets equity exposure as a strategic positioning. |
China Taiwan South Korea Asia Global | |
| 2025 Q1 |
QualityThe manager emphasizes sustainable quality compounding with focus on companies achieving high returns on incremental invested capital (>20/25%). They stress the importance of measuring free cash flow performance, proper capital allocation management, and understanding the ROIIC framework for value creation. |
ROIIC Compounding Capital Allocation Free Cash Flow Value Creation |
| 2024 Q4 |
QualityThe manager focuses on high-quality compounders that delivered 15.0% EBITA per share growth in 2024. They emphasize companies that show resilience and continue thriving through volatile periods, with a focus on business longevity rather than short-term market movements. |
Compounders EBITA Resilience Longevity Quality Growth |
| 2024 Q3 |
Risk ManagementThe firm employs a comprehensive hedging protocol using 49 different indicators to monitor market risk and determine appropriate portfolio positioning. Their flagship risk model moved from neutral to bullish during the quarter, supporting their overweight stock exposure. |
Hedging Risk Model Indicators Portfolio Exposure |
| 2024 Q2 |
AIInvestor enthusiasm has remained high around artificial intelligence and cloud infrastructure, with the largest companies investing substantial dollars into AI progress. The team is watching developments in the quickly changing AI and digital landscape. |
Cloud Technology Investment Infrastructure |
RatesThe Federal Reserve decided to reduce short-term rates for the first time this year, with median projections showing a downward trend of about 100 basis points by 2025. Lower borrowing costs could boost corporate and real estate profitability. |
Federal Reserve SOFR Borrowing Corporate Real Estate | |
| 2024 Q1 |
AIMost companies have adopted AI in some form. The largest U.S. companies are investing billions into AI and are already benefiting from automation, productivity, and personal assistance services. |
Technology Automation Productivity |
Defense SpendingWhile the U.S. has pulled back from arms support in Ukraine, European countries have picked up the ticket and defense companies are benefiting from it. |
NATO Ukraine Defense |
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