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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, Brandes Small Cap Value Fund. This analysis is provided for institutional research purposes only and is not investment advice.
"Brandes Small Cap Value delivered strong absolute returns but lagged the Russell 2000's AI-driven rally by deliberately avoiding expensive technology infrastructure plays. The fund doubled down on value discipline, adding defensive food companies like Campbell's at attractive valuations while trimming appreciated industrials winners."
The Brandes Small Cap Value Fund returned 13.85% in Q2 2026, underperforming the Russell 2000 Index which rose 21.49%, but delivered 23.17% year-to-date, outperforming the benchmark's 22.57%. Performance was driven by industrials holdings, particularly aerospace and defense companies Moog, Park Aerospace, and Graham Corporation, which benefited from increased defense and space demand, and Orion Group, which capitalized on data center construction. The fund's significant underperformance came from underweight exposure to information technology, which accounted for over 35% of benchmark returns as AI infrastructure beneficiaries surged. The fund deliberately holds IT services and software companies like Globant, Amdocs, and NICE where AI disruption fears are elevated, believing the market has excessively discounted near-term risks. The manager increased consumer staples exposure by adding Campbell's and Conagra Brands, viewing these mature food businesses as attractively valued with margin recovery potential. The fund maintains a disciplined value approach, selling positions at intrinsic value to pursue opportunities with greater margin of safety, and remains optimistic about long-term positioning.
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