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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 Large Cap Strategy. This analysis is provided for institutional research purposes only and is not investment advice.
"Diamond Hill's Large Cap Fund underperformed by 1,052 basis points in Q2 2026, driven almost entirely by avoiding AI beneficiaries like Micron while the technology sector surged 81%. The manager maintains conviction in enterprise software holdings despite AI disruption concerns and added managed care exposure on improving Medicare reimbursement."
Diamond Hill's Large Cap Fund returned 3.35% in Q2 2026, underperforming the Russell 1000 Value Index's 13.87% return, with nearly all underperformance attributable to the information technology sector. The Fund's lack of exposure to AI beneficiaries like Micron, which alone accounted for 25% of relative underperformance, was the primary detractor as the sector returned 81% driven by AI-related capital expenditures. Software holdings also detracted as AI uncertainty weighs on the industry, though the manager believes current valuations for Salesforce, Adobe, and Microsoft embed excessive pessimism. Bright spots included managed care holdings Humana and Elevance, which benefited from better-than-expected Medicare rate increases, and Nucor, which gained from data center-driven steel demand and supportive trade policy. Energy was the worst-performing sector at -14% following an Iran peace agreement. The manager believes above-average market valuations will lead to below-average returns over five years but remains confident in generating alpha through bottom-up stock selection, adding three new positions while eliminating five others to deploy capital to more attractive opportunities.
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