American Century Small Cap Value underperformed in Q2 2026, returning 15.58% versus the benchmark's 17.19%, primarily due to missing AI-driven technology rallies and energy sector weakness from lower oil prices. Semiconductor equipment providers and AI-enabled advertising technology were bright spots. The portfolio maintains conviction in financials and industrials trading below historical valuations with strong cash flow generation, while avoiding health care due to unattractive risk/reward profiles.

Carrington delivered strong Q2 performance by avoiding the semiconductor speculation bubble that dominated markets, maintaining structural underweights to US equities and overweights to China, UK, Europe and Asia. The Iran conflict drove oil volatility while retail investors pushed semiconductors to extreme valuations. Capital rotation toward value late in the quarter validated the positioning. The manager added to precious metals miners and Japanese small caps while reducing bonds for cash as inflation persists above target.

Holland Advisors is rotating away from market speculation in unproven AI beneficiaries toward established network businesses with sustainable competitive advantages trading at 30-50% discounts. The fund added to Amazon, Meta, Netflix, Nu Holdings, Wise, and Block on weakness while initiating positions in Mercado Libre, Sea Limited, Constellation, and AppFolio. With 87% invested alongside owner-managers and double unleveraged exposure, the portfolio targets 20% annual compounding from proven digital leaders embracing AI innovation.

Praetorian declined 4.39% as Mid-East war temporarily broke Feudalism dynamics the fund is positioned for. Core thesis: Economic Feudalism continues with weak-Dollar catalyzing Emerging Markets, refiners benefiting from supply tightness, and technical colleges capturing AI reskilling. AI capex is a historic bubble supporting 10%+ of GDP that will unwind badly. Manager awaits equity decline to deploy at bargain levels.

Wealthspire views Q2 2026 market strength as consistent with 250 years of American economic resilience, with the S&P 500 up 10.2% year-to-date driven by 30% earnings growth. AI infrastructure investment, while substantial and speculative, mirrors historical innovation cycles that ultimately drive productivity. Persistent inflation and market concentration warrant caution, but broadening participation across small caps, energy, and industrials signals the foundation for the next growth phase is being built.

Moon Capital underperformed in H1 2026 with a 4% return versus the S&P 500's 9.6%, driven by significant underweight to AI stocks. The manager actively avoids major tech companies deploying $1.8 trillion in AI capex with uncertain returns. Portfolio activity included exiting DaVita after 174% gain and adding Zoetis at depressed 11x earnings, capitalizing on temporary weakness in high-quality animal health leader.

Temasek delivered 10.5% returns with portfolio value reaching S$518 billion, doubling over a decade. The firm restructured into three focused entities to sharpen execution across Singapore companies, global investments, and partnerships. Strategic priorities target scaling AI, infrastructure, and private credit exposure while maintaining disciplined deployment amid geopolitical complexity. Long-term returns of 7.1% over 10 years demonstrate resilience, with active stewardship driving value creation across the portfolio.

Dynasty Trust returned 7.2% quarterly despite 6.5% currency drag, led by Virtu Financial's volatility-driven gains. Manager's valuation discipline avoided AI-related software collapse while missing opportunities in Samsung and Alphabet. Opportunistically added Wise Group post-listing decline. Portfolio maintains patient positioning in travel holdings including EVT Limited at 34% discount to NAV, with hotel business evolution as key catalyst. Travel thematic supported by structural 5.3% passenger growth representing 10% global GDP.

Advisory Research delivered strong Q2 2026 returns through concentrated dividend positions while maintaining that AI will drive transformative productivity gains despite near-term inflationary pressures from infrastructure buildout. The managers view inflation as underpriced by markets, with potential Fed tightening extending into 2027. They are bullish on AI chipmakers like NVIDIA but watching closely for value creation shifts from training to inference infrastructure.

NZS Capital delivered 24.76% net returns in Q2 2026 driven by concentrated semiconductor exposure capturing AI infrastructure demand. The manager re-entered NVIDIA at attractive valuations while trimming momentum winners back to optionality. Healthcare presents compelling opportunities with improving fundamentals and multiple compression creating entry points. The portfolio maintains disciplined concentration in AI ecosystem, grid infrastructure, and select healthcare innovators with narrowing outcome ranges.

Rewey Asset Management's SMID Value strategy returned 20.06% in Q2 2026, capturing the ongoing rotation from large-cap tech to undervalued small and mid-caps. The manager added Vontier at compelling 8.7x PE valuation while trimming Ultra Clean after 127% surge on semiconductor cycle inflection. Portfolio holds 31 concentrated positions in financially strong companies with clear catalysts, positioned for continued small-cap outperformance as inflation ebbs and economic growth stabilizes.

Parnassus Core Equity outperformed in Q2 2026 with a 16.83% return, driven by semiconductor and AI infrastructure holdings. The fund balances 40% offensive AI positions with 60% defensive quality compounders, adding exposure to electrical infrastructure and food delivery while exiting competitive healthcare and software names. Management remains constructively bullish on U.S. equities despite record market concentration, positioning for foundational infrastructure ownership at sensible valuations.

Third Avenue International Real Estate Value Fund trades at 10 times earnings, half the valuation of U.S. REITs, despite similar earnings growth. The manager added positions in Spanish homebuilder Neinor and Australian industrial REIT Dexus Industria, deepening exposure to chronically undersupplied residential markets and logistics real estate. With 10% earnings yield and high-single-digit growth, the manager views this as one of the most attractive entry points in Fund history.

Third Avenue Value Fund underperformed in Q2 2026 as markets chased semiconductors and AI while the Fund stayed disciplined in out-of-favor tangible asset plays. Core holdings in offshore energy services, copper mining, and Japanese industrials offer deep value with catalysts including energy security trends, supply shortages, and corporate restructurings. Two takeover bids validated the asset-backed approach. Manager sees multiple paths to wealth creation from current discounted positioning.

Contrarius returned 20.9% in Q2 2026 by investing in AI-Winners and AI-Proof companies at attractive valuations. Sony exemplifies this dual thesis: it owns irreplaceable music catalogues, film libraries, and gaming franchises that appreciate as AI content proliferates, while manufacturing 53% of global image sensors positioned to dominate physical AI in autonomous vehicles and robotics. The market prices it as a tired conglomerate despite a fortress balance sheet and improving management.

GoodHaven runs a concentrated 18-position value portfolio trading at 17.6x earnings versus 23.7x for the S&P 500, with 69% in top 10 holdings including Berkshire (16.8%) and Alphabet (10.2%). The manager targets quality businesses at discounts across financials, housing, energy, and digital advertising, emphasizing that value and growth are connected. Following a 2020 upgrade, the fund has delivered 10.92% annualized over five years despite lagging YTD.

AI-driven demand for memory chips has created extraordinary profit opportunities for semiconductor manufacturers, with Micron achieving 68% net margins on 346% revenue growth. The South Korean KOSPI surged 101% in the first half of 2026 driven by SK Hynix and Samsung. However, this growth stems from supply scarcity rather than sustained demand. New capacity arriving in 2027-2028 will likely erode pricing power and compress margins, making periodic trimming of semiconductor exposure prudent.

Parnassus Growth Equity outperformed in Q2 2026 on strong semiconductor and AI infrastructure holdings, rotating capital into biotechnology and data center positions with clearer growth paths. Managers remain constructively bullish on AI as a structurally disruptive force while navigating heightened market concentration and mixed macro conditions. The fund maintains selective exposure to innovation in semiconductors, healthcare, and data infrastructure at attractive valuations.

Parnassus Value Equity Fund delivered 17.86% in Q2 2026, outperforming on AI-driven semiconductor strength and zero Energy exposure. Managers trimmed winners and rotated into hyperscaler cloud platforms, seeing underappreciated AI infrastructure demand. Portfolio remains quality-anchored with balanced cyclical-defensive positioning. Added Coca-Cola for resilience. Cautiously optimistic on lower inflation and AI investment tailwinds while maintaining disciplined margin-of-safety approach to navigate elevated uncertainty.

Hoisington argues the U.S. is exiting globalization's disinflationary era and entering a structurally higher inflation regime (3.5-4.5%) driven by supply chain fragmentation, labor scarcity, and surging capital demands from industrial policy and AI infrastructure. With net national saving near historic lows and the Fed under Warsh expected to pursue balance sheet restraint, the outlook is for more volatile interest rates with upward pressure on long-term Treasury yields.

Distillate's International FSV strategy lagged in Q2 2026 as AI-driven momentum and semiconductor concentration dominated returns, but the manager sees this as opportunity. AI names gained $25 trillion in value on just $300 billion of FCF growth, creating extreme valuation bifurcation. The strategy trades at 8.5% FCF/EV yield versus 4.6% for the benchmark, the widest discount since inception, positioning for outperformance when fundamentals reassert themselves as they did post-2000.

Giverny Capital maintains a concentrated portfolio of quality earnings compounders despite Q2 underperformance driven by extreme market dispersion favoring momentum. Manager Poppe trimmed expensive AI winners Alphabet and Arista to add to undervalued financials like Schwab and Progressive growing earnings 15-25% annually but trading at half the market multiple. He views current momentum-chasing as unsustainable and expects long-term returns to follow earnings growth.

RTW Biotech Opportunities returned 18.1% in Q2 2026, capitalizing on improved biotech sentiment driven by FDA leadership changes, strong M&A including AbbVie's $10.9 billion acquisition of portfolio company Apogee, and positive late-stage oncology data at ASCO. The fund maintains a concentrated portfolio of 48 positions focused on transformative therapeutics across oncology, immunology, and rare diseases, with new investments in gene therapy and protein degradation platforms.

Airlie delivered 10.6% in Q2 2026, outperforming by 6.5% as materials and USD earners reversed prior headwinds. The fund maintains a large underweight in expensive Australian banks facing deteriorating fundamentals from slowing credit growth and negative gearing bans, expecting earnings downgrades and de-rating. Best opportunities lie in quality industrials that have de-rated sharply. Changing market structure creates enhanced volatility the manager exploits through active trading around core positions.

Madison Dividend Income underperformed in Q2 as Technology surged to 1999-like extremes, pushing S&P 500 valuations to record highs. The managers position defensively in high-quality dividend stocks, viewing Energy's 13.5% decline as an opportunity given healthy fundamentals. Top holding Exxon Mobil offers 3% yield and 43 consecutive years of dividend growth. The 2.6% portfolio yield and 94% A- or better credit ratings provide downside protection against potential market correction.

Purpose Credit Opportunities Fund delivered strong five-year cumulative returns of 27.2% through disciplined bottom-up credit research. The team views Middle East developments and rising corporate bond issuance for data center investment as key macro factors. Portfolio actions included adding to Canada Cartage on improving trucking industry fundamentals and reducing LoanDepot exposure given elevated Treasury yields and mortgage origination headwinds.

Ganes Focused Value Fund returned 6.1% in Q2 2026, outperforming the market's 4.1%, but lagged over the full year. The concentrated portfolio of founder-led Australian businesses delivered mixed results with Dicker Data rising 45% on data centre and AI demand while ARB Corporation fell 40% on its first profit downgrade in 25 years. The manager maintains conviction in long-term value despite near-term challenges.

Distillate's International FSV strategy lagged in Q2 2026 as AI-driven momentum and semiconductor concentration dominated returns, but the manager sees this as opportunity. AI names gained $25 trillion in value on just $300 billion of FCF growth, creating extreme valuation bifurcation. The strategy trades at 8.5% FCF/EV yield versus 4.6% for the benchmark, the widest discount since inception, positioning for outperformance when fundamentals reassert themselves as they did post-2000.

Small-cap growth navigated Q1 volatility with data center infrastructure holdings driving outperformance as hyperscalers committed nearly $800 billion in AI capex. Energy spiked on Iran strikes but appears temporary. Portfolio positioned constructively in cyclicals benefiting from data center buildout, defense spending, and energy infrastructure while selectively adding healthcare distributors. Reasonable valuations and multiple catalysts support outlook despite near-term geopolitical and regulatory uncertainty.

Deep Sail Capital returned 41.6% net in Q2 2026, driven by concentrated positions in AI data center infrastructure including Credo Technology and Celestica. Manager warns AI mega IPO lockups may trigger market decline in early 2027 but remains bullish on three-year data center ramp. Fund holds 21 longs and 23 shorts at 86% net long, positioned for 1.6T networking and co-packaged optics adoption.

Titan Wealth's multi-manager strategies delivered exceptional first-half returns driven by concentrated AI and semiconductor exposure, with technology up 33% and emerging markets outperforming by 10 percentage points. Manager maintains high conviction in structural themes including AI infrastructure, energy transition, and emerging market technology leadership through holdings like Polar Capital Artificial Intelligence and KLA. Recently added healthcare to diversify concentration risk while expecting markets to grind higher despite elevated valuations and sticky inflation.

Ariel Focus Fund returned 2.14% in Q2 2026, underperforming broad indices despite strong contributions from Affiliated Managers Group, Madison Square Garden Entertainment and PHINIA. The concentrated value portfolio emphasizes high-quality businesses at attractive valuations through rigorous fundamental research. The manager added Dentsply Sirona as a turnaround opportunity while maintaining discipline amid modest global growth, concentrated market leadership and persistent macro uncertainty heading into the second half.

The fund captured strong semiconductor gains in Q2 2026 as AI infrastructure drove the S&P 500's best quarter in seven years, with holdings in Corning, Broadcom, and Lam Research contributing meaningfully. The manager remains cautious on market fragility from speculative AI positioning and potential stagflation risks, maintaining discipline around quality companies with strong balance sheets that can navigate elevated geopolitical uncertainty and possible Fed rate hikes.

The fund underperformed in Q2 2026 despite strong AI infrastructure spending driving semiconductor and cloud computing gains. Technology companies accelerated AI investments to $710 billion while the Iran War created oil supply shocks and inflationary pressures. The Fed maintained hawkish policy under new leadership. The manager maintains conviction in quality large-cap holdings with strong balance sheets positioned to benefit from AI trends and adapt through geopolitical uncertainty.

The fund delivered strong performance driven by AI infrastructure holdings in semiconductors, test equipment, and optical networking, while energy and consumer positions lagged. The managers maintain AI exposure but acknowledge more balanced valuations and are monitoring for capital expenditure cracks and buildout constraints. They see opportunities in shifting AI bottlenecks, aerospace, and infrastructure while balancing exposure with undervalued non-consensus stocks punished by market dynamics.

The fund delivered 0.85% in June, outperforming peers through overweight corporate bond exposure and active duration management. With credit spreads at historic tights and central banks likely to keep policy restrictive longer, the managers focus on generating returns through income and carry rather than spread compression or duration bets. They prioritize high-quality corporate bonds, CLOs, and mortgage securities offering attractive yields without excessive risk.

L1 Capital underperformed in Q2 2026 as extreme market concentration favored AI momentum stocks the fund didn't own. The manager increased Nvidia exposure while reducing software holdings due to AI disruption risks, rebalancing toward quality non-AI businesses at compelling valuations. Despite genuine strength in AI infrastructure spending, stretched valuations in some AI Winners contrast with attractive opportunities elsewhere. The portfolio is positioned for patient investors willing to look through near-term momentum.

Madison Mid Cap underperformed in Q2 2026 as markets became hyper-concentrated in AI infrastructure plays, with nine of the Russell Midcap's ten largest companies being direct AI beneficiaries. While the fund's AI-exposed holdings led performance, managers warn current euphoria reflects excessive risk appetite. They're adding to overlooked quality companies at attractive valuations, positioning for eventual rotation away from narrow AI concentration toward broader market participation.

The fund delivered strong outperformance driven by healthcare stock selection and AI-beneficiary technology holdings. Managers view AI infrastructure spending as a transformative economic driver, with computing power demand exceeding supply and creating pricing power across the supply chain. The portfolio balances direct AI capability builders with capital spending beneficiaries. Despite margin pressure at select holdings, the team maintains conviction in long-term enterprise value creation through disciplined fundamental analysis.

Alger Spectra returned 25.05% in Q2 2026, outperforming its benchmark by 800 basis points. The fund is positioned in AI infrastructure companies benefiting from record capital spending as the technology enters its agentic phase. Top contributors included Nebius Group, Astera Labs, and Western Digital, all capitalizing on surging demand for AI computing power and data center expansion by hyperscale cloud providers.

AVI Japan Opportunity Trust invests in concentrated, over-capitalized Japanese small-caps, using active engagement to unlock value. June saw strong performance from Sharingtechnology (+41%) on strategic option expectations and Sanyo Shokai (+10%) on improved capital allocation. The manager controls 5%+ stakes in 14 holdings representing 66% of NAV, driving governance improvements and shareholder returns in an under-researched market with growing activism momentum.

AWO generated 8.1% in Q2 by exploiting wide discounts in London-listed closed-end funds through corporate catalysts. Gresham House Energy Storage led gains with a potential sale process ahead. Seraphim Space delivered alpha through active trading around a major revaluation. Bluefield Solar was taken private at a 17% premium. Private equity holdings benefited from capital return programs. The closed-end fund opportunity set remains compelling.

The Alger Small Cap Focus Fund delivered 31.4% in Q2 2026, outperforming its benchmark by 570 basis points. AI infrastructure drove performance as the fund capitalized on accelerating investment in data center compute capacity, with Nebius Group and Credo Technology as top contributors. The manager maintains concentrated exposure to AI enablers, precision diagnostics, and defense technology, viewing AI's shift to agentic systems as a multi-year growth driver.

Cannara Biotech delivered Q3 results ahead of estimates with revenue up 16% and EBITDA up 11%, maintaining strong margins while expanding market share in Ontario and Alberta. The company secured its first international supply deal with Curaleaf worth up to $21M and accelerated capacity expansion to 75,000kg by FY27. Trading at 6.5x forward EBITDA versus peers at 6-10x despite superior growth, the stock offers 60% upside to Atrium's $3.00 target.

Pernas Portfolio returned 30% in Q2, outperforming indexes substantially. Manager sees an extraordinary multi-year opportunity for active managers to beat the S&P 500 due to index concentration in richly valued mega-caps forced into an AI arms race. Hyperscalers committing $750 billion in AI spending creates productivity spillovers. Portfolio positioned in smaller companies that benefit from AI infrastructure without funding it, focusing on those converting AI into superior business economics.

Riverwater's Small Cap strategy trailed the Russell 2000's 21% Q2 surge as markets rewarded speculation over quality. Energy stock selection drove outperformance through services positioning, while healthcare lagged as speculative biotech rallied. The manager added seven positions including Werner Enterprises and Lifeway Foods, trimmed semiconductor winners, and repositioned toward defensive consumer staples. They anticipate rotation into quality businesses as AI speculation unwinds, playing to their disciplined investment philosophy.

Far View returned +0.91% in H1 2026, benefiting from Westwing's turnaround and UNFI's cyberattack recovery, offset by Sanuwave's wound-care market disruption and Russell 2000 removal. The manager established a mid-sized position in Upsales Technology AB at a double-digit free cash flow yield after a demerger revealed hidden 35%+ EBITDA margin profitability. Despite momentum-driven markets, the fund remains fully invested, focused on overlooked small-cap value opportunities.

Madison Small Cap Fund underperformed the Russell 2000's 21.5% Q2 rally, returning 12.7% as AI-driven tech and biotech surged. Recent software investments and healthcare positions dragged performance despite strong conviction in their long-term value. The fund actively repositioned, adding four new holdings in semiconductors, networking, and HVAC while exiting underperformers. Managers see encouraging signs in small-cap breadth, software recovery, and potential housing rebound.

Market leadership has rotated dramatically with mega-cap tech stocks now reasonably valued for the first time in years while small caps remain cheap despite their best first half since 1991. The manager is buying out-of-favor quality like Microsoft and small-cap value opportunities while avoiding semiconductor stocks trading at potentially unsustainable peak earnings. Individual stock selection matters again as the market's broadening creates opportunities for disciplined value investors.