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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
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Buyside Digest is not affiliated with, and does not endorse, Diamond Hill Small Cap Fund. This analysis is provided for institutional research purposes only and is not investment advice.
"Diamond Hill's Small Cap Strategy outperformed the Russell 2000 by 255 basis points in Q2 2026, driven by stock selection in health care and industrials. The manager has aggressively increased health care exposure by 800 basis points over the past year, seeing compelling opportunities in businesses with durable demand that the market underappreciates."
Diamond Hill's Small Cap Strategy returned 24.04% net in Q2 2026, outperforming the Russell 2000 Index by 255 basis points. The portfolio's outperformance was driven by stock selection in health care and industrials, while an underweight to information technology served as a relative headwind. The manager has steadily increased health care exposure by nearly 800 basis points over the past 12 months, driven by increasing conviction in businesses supported by durable, long-term demand that the market is underappreciating. Defense-oriented and tangible-asset businesses also drove strong performance. Five new positions were initiated during the quarter, including Insteel Industries, BioLife Solutions, InfuSystem, FreightCar America, and Daktronics, while three positions were eliminated. The manager continues to find compelling opportunities in businesses tied to infrastructure investment, defense modernization, and other essential industries where demand remains supported by long-term structural trends. The portfolio remains focused on resilient businesses capable of navigating a wide range of economic environments while maintaining the flexibility and financial strength to invest through periods of uncertainty.
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