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| # | Fund | Strategy | Style | Geography | AUM | Latest Letter |
|---|---|---|---|---|---|---|
As of Aug 10, 2026
The Aristotle Small Cap Equity Fund returned 13.69% in Q2 2026, underperforming the Russell 2000 Index's 21.49% return as the small cap market delivered its strongest quarterly performance since 2020. The fund's underperformance was driven primarily by security selection in information technology, where the fund owned Everforth and missed gains in non-owned names like Credo Technology and quantum computing stocks, as well as underweight positioning in the high-flying growth and AI-related segments that led the quarter. Contributors included MACOM Technology Solutions and Mercury Systems, both benefiting from strong demand in data center, defense and telecom end markets. The manager remains constructive on small caps long-term, citing attractive valuations near multi-decade lows relative to large caps, reaccelerating earnings, and structural tailwinds from M&A activity, reshoring, infrastructure investment and favorable regulatory backdrop. Near-term caution persists around geopolitical risks including the Iran conflict and mid-term election uncertainty. The fund maintains its disciplined, low-turnover approach focused on quality businesses with strong fundamentals trading at attractive valuations.
The Aristotle Small Cap Equity Fund employs a bottom-up, quality-focused value strategy targeting U.S. small cap companies with durable competitive advantages, strong balance sheets, and attractive long-term earnings power trading at compelling valuations relative to normalized earnings.
The manager remains constructive on the long-term outlook for U.S. small cap equities, citing attractive valuations with the Russell 2000 Index trading near multi-decade lows relative to large caps while earnings have begun to reaccelerate. Multiple structural tailwinds are expected including improving M&A activity, domestic manufacturing trends from reshoring and infrastructure investment, and a more favorable regulatory and tariff backdrop. Near term, the manager remains cautious due to geopolitical risks including the Iran conflict and potential inflationary spillovers, as well as mid-term election uncertainty which may contribute to elevated volatility before giving way to more durable small cap recoveries.
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