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Weathering the Volatility of Mid Cap Growth...

Weathering the Volatility of Mid Cap Growth Portfolios in Q3 2022

Mid Cap Growth Review of the Third Quarter of 2022 | KayneCast 200

November 4, 2022

In this episode of KanyeCast, Managing Director Jordan Greenhouse meets with Chris Armbruster, Portfolio Manager and Senior Research Analyst for the Kayne Anderson Rudnick Mid Cap Sustainable Growth portfolio. Together, they offer an insightful stock market review of Q3 2022 and look at factors expected to impact Mid Cap Growth in Q4 2022.

 

Global Businesses Feel the Impact of Anti-Recession Actions

Armbruster notes that the Fed increased its target federal funds rate by 1.5 percent from March 17 through June, then raised it by another 1.5 percent in the third quarter. Meanwhile, the Fed’s quantitative tightening of its $9 trillion balance sheet hit “full throttle in September, reaching a monthly run rate of $95 billion.

Armbruster believes that the Fed’s actions are having their intended goal: to slow the economy and curb inflation. He points out, however, that their goal may be many quarters away, and inflation continued to run hot in Q3, with the core PCE jumping unexpectedly. As a result, the market remains unsure when we’ll see an end to interest rate increases.

 

KAR’s Mid Cap Growth Strategy Stays the Course 

Armbruster believes that KAR’s investment philosophy of investing in high-quality businesses with durable revenue and strong financials will help the Mid Cap Growth portfolio weather 2022’s volatile market, eventually returning to growth faster as the market stabilizes.

Looking forward to Q4 2022, Armbruster suggests a chance for “guidance reductions and estimate cuts to accelerate materially in the fourth quarter.” Given the many challenges facing companies, he notes few businesses have reason “to be aggressive with growth plans or guidance given the level of uncertainty in the global economy.” He believes he result should be a low bar for Q4 earnings that high-quality companies could comfortably exceed.

Armbruster states that the resetting of market expectations could create additional volatility in Mid Cap Growth prices as the market looks ahead to Q4.

Listen to the podcast above to learn more about Mid Cap Growth in Q3 2022, and join us in Q4 for another stock market performance review.

DISCLOSURE

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.

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