| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 9.42% | 5.67% | 3.47% |
The 1290 SmartBeta Equity Fund returned 5.76% in Q2 2026 but underperformed its benchmark, which returned 13.76%, as the strategy faced a challenging environment in April and May before stabilizing in June. The quarter was dominated by geopolitical tensions involving US and Israeli strikes on Iran, which drove oil prices to $118 per barrel before a memorandum of understanding led to a sharp decline to $72.90, a 38.4% quarterly drop. The Fund's strategic exposure to high-quality companies helped performance, and its underweight to energy was rewarded. However, the low-volatility focus faced significant headwinds, with the MSCI Minimum Volatility Index experiencing its worst month since 1998 in April. The Fund's underweight to semiconductors and semiconductor equipment detracted materially as that sector rallied sharply on AI optimism in April and May. By June, investor focus shifted to concerns about AI returns, prompting rotation into defensives. The Fund maintains its strategic focus on quality and low volatility, which the manager believes positions it well for future market volatility. Low volatility stocks now trade near the bottom of historic ranges, suggesting mean reversion potential.
The 1290 SmartBeta Equity Fund pursues long-term capital appreciation through a quantitative strategy focused on high-quality and low-volatility stocks within a well-diversified portfolio.
The Fund expects to see an improvement in relative performance if market concentration reduces. The manager believes the Fund's focus on low volatility stocks positions it well to navigate further periods of market volatility. Recent underperformance of low volatility stocks has left them looking attractively valued versus the market, trading near the bottom of their historic trading ranges, suggesting potential for mean reversion. Provided the international situation does not deteriorate over the coming months, the global economy will have weathered a short-lived, moderate-scale energy shock.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jul 22 2026 | 2026 Q2 | AMD, CVX, INTC, MU, XOM | AI, energy, Factor Investing, low volatility, Quality, quantitative, semiconductors | - | The Fund's quantitative strategy targeting quality and low-volatility stocks underperformed in Q2 2026 as markets rewarded semiconductor exposure and penalized defensive positioning. The low-volatility factor experienced its worst month in 26 years in April. Energy underweights contributed positively as oil collapsed 38%. The manager maintains conviction in the strategy, noting low-volatility stocks now trade at historically attractive valuations with mean reversion potential ahead. |
| Apr 25 2026 | 2026 Q1 | - | defense, energy, Iran Conflict, Sector Allocation, technology, volatility | - | The 1290 SmartBeta Equity Fund's quantitative approach delivered relative outperformance during Q1 2026's volatile period marked by Iran war and energy crisis. Defensive sector positioning through underweights in technology and overweights in staples helped navigate market turbulence, though underweight Energy positioning hurt as oil prices spiked from Strait of Hormuz closure. |
| Jan 30 2026 | 2025 Q4 | FTSE | AI, equities, financials, global, healthcare, industrials, technology | - | The fund delivered solid Q4 performance driven by technology sector selection and AI gains, with financials and communication services contributing positively. However, poor stock selection in industrials and healthcare detracted from relative performance despite favorable sector positioning. Global equity rotation benefited international exposure while technology leadership continued. |
| Nov 5 2025 | 2025 Q3 | ISRG, NFLX, PM, TSLA | AI, Factor Investing, healthcare, low volatility, Quality, quantitative, SmartBeta, technology | - | The 1290 SmartBeta Equity Fund's quantitative approach focusing on low-volatility, high-quality stocks faced headwinds in 3Q25 despite strong global markets. While avoiding underperformers like Philip Morris and Netflix helped, the fund's factor exposure and lack of Tesla position detracted. The strategy maintains its systematic approach despite temporary factor underperformance. |
| Jul 27 2025 | 2025 Q2 | ABBV, AVGO, CVX, LLY, MCD, NFLX, NVDA, PEP, TT, XOM | Factor, global, Quality, SmartBeta, technology, Trade Policy, volatility | - | The 1290 SmartBeta Equity Fund's factor-based approach faced headwinds in Q2 2025 as low volatility and quality biases that helped during initial Trump tariff turbulence became performance drags during the subsequent risk-on recovery. Technology underweights and poor stock selection in key sectors offset benefits from avoiding energy exposure. |
| Mar 31 2025 | 2025 Q1 | NFLX, PLTR | Europe, Factor Investing, financials, low volatility, Quality, SmartBeta, technology | - | The 1290 SmartBeta Equity Fund's quantitative low volatility and quality factor approach provided defensive benefits during Q1 2025's volatile markets. Strong stock selection and favorable sector allocation drove performance, though the strategy faced headwinds from outperforming high volatility stocks. European strength from ECB cuts and German stimulus contrasted with US technology weakness from AI competition and trade policy uncertainty. |
| Dec 31 2024 | 2024 Q4 | NFLX, PLTR | Esg, Factor Investing, Quality, quantitative, Smart Beta, volatility | - | The 1290 SmartBeta Equity Fund uses quantitative screening to target higher quality, lower volatility stocks for long-term capital appreciation. Q4 performance was challenged by market preference for higher volatility names and underweight Technology exposure, though underweights to Materials and Healthcare provided some benefit as these sectors underperformed significantly. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q2 |
AIInvestors shifted focus to AI in early June, highlighting less-favorable elements. Earnings from some companies raised doubts about possible limits to future developments, particularly in networking equipment. By month-end, a rotation into defensive sectors prompted disengagements from the semiconductor sector that looked like profit-taking after impressive performances. |
Semiconductors Networking CapEx Compute |
Semiconductor CycleThe Fund's underweight exposure to semiconductors and semiconductor equipment was a key detractor from performance, especially in April and May, as this area rallied sharply on optimism around the AI investment cycle and compute demand. Underweight positions in Micron Technology, Intel, and Advanced Micro Devices were among the top ten detractors. By June, rising volatility in tech momentum emerged amid investor uncertainty about return on AI investment. |
Memory Equipment Compute Volatility | |
QualityThe strategic exposure to high Quality companies helped performance during the quarter as the Fund's proprietary measure of Quality was rewarded. The Fund maintains its strategic focus on investing in high-quality stocks within a well-diversified portfolio. |
Factor Proprietary Diversification | |
VolatilityThe strategic focus on companies exhibiting Low Volatility faced a significant headwind. The MSCI Minimum Volatility Index experienced its worst month of performance in April since the index incepted in June 1998. However, the Fund successfully limited participation during bouts of volatility and market sell-off, with the most recent example being June/July's on/off tech rout. The Fund's focus on low volatility stocks positions it well to navigate further periods of market volatility, and recent underperformance has left them looking attractively valued versus the market, trading near the bottom of their historic trading ranges, suggesting potential for mean reversion. |
Min Vol Defensives Mean Reversion Valuation | |
OilBrent crude traded at $118 a barrel at the end of March and remained high until mid-May before easing on hopes of a deal. It dropped on June 16th and by June 26th fell below the pre-conflict level, closing the quarter at $72.9, a 38.4% quarterly decline. The underweight exposure to the energy sector was rewarded, with below-benchmark positions in Exxon Mobil and Chevron among the top contributing stock positions. |
Brent Energy Underweight | |
| 2026 Q1 |
DefenseDefense companies reached record market highs in January driven by the escalating conflict in the Middle East. The war in Iran and broader regional tensions have benefited aerospace and defense companies as investors seek exposure to defense spending themes. |
Defense Aerospace Military Conflict Spending |
EnergyEnergy companies have seen gains following the war in Iran and rising oil and gas prices due to the closure of the Strait of Hormuz. However, the Fund's underweight positioning to the Energy sector has been a headwind to performance during this period. |
Energy Oil Gas Strait of Hormuz Prices | |
AIThere was an artificial intelligence sell-off during the quarter as worries grew that AI was disrupting an ever-growing list of sectors as well as the broader economy. This contributed to market volatility and negative performance. |
AI Technology Disruption Sell-off Volatility | |
| 2025 Q4 |
AIAI continued as a major market theme with over 300 S&P 500 companies mentioning artificial intelligence on earnings calls. However, scrutiny increased around AI-related revenue circularity, massive capital spending scale, and durability of longer-term returns on investment. Oracle faced concerns about OpenAI backlog concentration risk and significant debt required for datacenter commitments. |
Artificial Intelligence Data Centers Capital Spending Revenue Circularity Infrastructure |
Trade PolicyTrade relations between the U.S. and China remained a key market focus with tensions flaring over tariff escalations and export controls. China dramatically expanded export controls on rare earth minerals while the U.S. threatened 100% tariffs in retaliation. A one-year trade truce was ultimately reached between Presidents Trump and Xi Jinping. |
Tariffs China Export Controls Rare Earth Minerals Trade Relations | |
CryptoThe fund added Coinbase Global as a new position, viewing it as the dominant player in the U.S. cryptocurrency market with over 65% trading volume share. Recent passage of the GENIUS Act and anticipated CLARITY Act are expected to provide regulatory clarity, boosting institutional adoption and trading volumes. |
Cryptocurrency Regulatory Clarity Trading Volumes Institutional Adoption Market Share | |
| 2025 Q3 |
AIArtificial intelligence stocks provided a further burst during the quarter, contributing to the strong performance of global markets and helping to buoy investor sentiment alongside other positive factors. |
AI Technology Growth |
QualityThe fund's strategy focuses on low-volatility, high-quality stocks, though this factor exposure underperformed during the quarter. The fund maintains its bias toward high-quality earnings as part of its core investment approach. |
Quality Low Volatility Earnings | |
| 2025 Q2 |
Trade PolicyTrump's tariff policies dominated market movements throughout the quarter, with Liberation Day tariffs causing initial sell-offs followed by recovery as trade deals were negotiated with the UK and China. The fund navigated the initial Trump Tariff Turbulence well due to its low volatility exposure. |
Tariffs Trade Negotiations China UK |
QualityThe fund's quality factor exposure provided mixed results during the quarter. While quality helped during the initial tariff turbulence, only high-volatility, high-quality technology stocks outperformed during the subsequent risk-on recovery phase. |
Quality Factor Technology Volatility Performance | |
VolatilityLow volatility stocks underperformed during the strong risk-on recovery that followed the initial tariff concerns. The fund's inherent low volatility bias hurt performance as markets favored higher volatility names in the rebound. |
Low Volatility Risk-on Recovery Underperformance Factor | |
| 2025 Q1 |
AIThe emergence of China's DeepSeek AI intensified competition concerns, particularly impacting semiconductor firms and leading to underperformance among Magnificent Seven stocks. This contributed to a broadening of market performance and fueled rotation out of previously dominant US technology stocks. |
DeepSeek Competition Semiconductors Technology |
Defense SpendingGermany announced a substantial stimulus package focusing on defense and infrastructure spending, which markedly boosted investor confidence across the European continent and contributed to Europe's strong performance during the quarter. |
Germany Stimulus Infrastructure European | |
Trade PolicyDonald Trump's return to the White House injected uncertainty around US trade policy and global growth. Japanese stocks faced pressure from specific US tariff fears targeting the auto industry, which pushed the Nikkei lower. |
Trump Tariffs Auto Industry Japan | |
| 2024 Q4 |
QualityThe fund maintains a strategic focus on higher quality companies as part of its quantitative screening process. High quality names underperformed marginally during the quarter, which weighed on the fund's performance given its emphasis on quality metrics in stock selection. |
Quality Earnings Fundamentals |
VolatilityThe fund has a strategic allocation toward low volatility stocks as part of its smart beta approach. However, stocks with higher volatility significantly outperformed those with lower volatility during the quarter, working against this positioning and hurting performance. |
Volatility Risk Low Volatility |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| No Elevator Pitches found | ||||||||||
| TICKER | COMMENTARY |
|---|---|
| XOM | The underweight exposure to the energy sector was rewarded with below-benchmark positions in Exxon Mobil (0.12%) among the top contributing stock positions. |
| CVX | The underweight exposure to the energy sector was rewarded with below-benchmark positions in Chevron (0.11%) among the top contributing stock positions. |
| MU | A key detractor from active performance was the Fund's underweight exposure to the semiconductors and semiconductor equipment industry, especially in April and May, as this area of the market rallied sharply on optimism around the AI investment cycle and compute demand. At an individual stock level, underweight positions in Micron Technology (0.81%) were all among the top ten detractors from performance. |
| INTC | A key detractor from active performance was the Fund's underweight exposure to the semiconductors and semiconductor equipment industry, especially in April and May, as this area of the market rallied sharply on optimism around the AI investment cycle and compute demand. At an individual stock level, underweight positions in Intel (0.00%) were all among the top ten detractors from performance. |
| AMD | A key detractor from active performance was the Fund's underweight exposure to the semiconductors and semiconductor equipment industry, especially in April and May, as this area of the market rallied sharply on optimism around the AI investment cycle and compute demand. At an individual stock level, underweight positions in Advanced Micro Devices (0.46%) were all among the top ten detractors from performance. |
| Ticker | Put/Call | Amount Bought | Shares Bought | % Change | Weight % |
|---|---|---|---|---|---|
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| Ticker | Put/Call | Amount Sold | Shares Sold | % Change | Weight % | Status |
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| Industry | Prev Quarter % | Current Quarter % | Change |
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