Insights
“When you can own durable, high-quality businesses at a valuation that no longer demands a premium, I think that’s a good opportunity.”
Each quarter, Hyung Kim, Portfolio Manager and Senior Research Analyst, provides an update on the performance of the International Small Cap strategy and shares his market outlook. Listen to his most recent episode where Hyung recaps market activity during 2Q 2026.
Key Insights and Trends
- Market leadership remained highly concentrated, with AI-related businesses and Asian technology companies driving much of the quarter’s returns
- Relative performance was impacted primarily by the strategy’s underweight position in information technology during a period when higher-leverage, higher-valuation, and higher-momentum companies led the market
- The portfolio’s valuation premium to the benchmark has disappeared, resulting in the strategy trading at a discount despite maintaining higher-quality business characteristics
- As market leadership remains concentrated in a small number of AI-driven companies, quality international small caps may offer differentiated exposure to local economic growth and business fundamentals
- Primary contributors and detractors to the International Small Cap strategy
Stay Informed with Our Latest Insights
For more insights, read our 2Q 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.
This information is being provided by Kayne Anderson Rudnick Investment Management, LLC (“KAR”) for illustrative purposes only. Information contained in this material is not intended by KAR to be interpreted as investment advice, a recommendation or solicitation to purchase securities, or a recommendation of a particular course of action and has not been updated since the date of the material, and KAR does not undertake to update the information presented should it change. This information is based on KAR’s opinions at the time of the recording of this material and are subject to change based on market activity. There is no guarantee that any forecasts made will come to pass. KAR makes no warranty as to the accuracy or reliability of the information contained herein. Past performance is no guarantee of future results.
