“Energy led the way in terms of sector performance—increasing 37% during the quarter—and our lack of exposure created a meaningful headwind. At the same time, fears of AI overspending and AI‑driven disruption contributed to rotations away from software‑oriented businesses.”
Each quarter, Jon Christensen, Portfolio Manager and Senior Research Analyst, provides an update on the performance of the Mid Cap Core strategy and shares his market outlook. Listen to his most recent episode where Jon recaps market activity during 1Q 2026.
Key Insights and Trends
- Markets were highly volatile during the quarter as geopolitical conflict in the Middle East drove a sharp rise in energy prices and increased concerns around inflation and recession risk
- Accelerating fears around AI obsolescence contributed to pressure on software‑exposed holdings, as investors adopted a “sell now, ask questions later” approach despite the embedded nature of many of these businesses
- Weakness in private credit markets and continued pressure on software‑exposed holdings weighed on several portfolio companies during the quarter
- Primary contributors and detractors to the Mid Cap Core strategy
Stay Informed with Our Latest Insights
For more insights, read our 1Q 2026 Market Review Commentary or subscribe to KayneCast where we provide the latest updates from the KAR Investment Team on our investment strategies.
KayneCast is available on Apple Podcasts and Spotify.
