“Despite the fact that we have an ongoing conflict with Iran that has kept oil prices at high levels – though not astronomical. Despite the fact that we are seeing pressure on the consumer due to inflationary pressures. Despite the fact that the Fed is now talking more about raising rates than cutting rates – investors are convinced that the hyperscalers spending on the AI infrastructure will continue for a long time.”
Each quarter, Jon Christensen, Portfolio Manager and Senior Research Analyst, provides an update on the performance of the Small Cap Core strategy and shares his market outlook. Listen to his most recent episode where Jon recaps market activity during 2Q 2026.
Key Insights and Trends
- The Russell 2000’s historic quarterly gain was driven largely by technology, healthcare, and high-beta stocks, creating a challenging environment for quality-oriented investors
- Portfolio companies continued to generate earnings growth, return on equity, and business stability consistent with the strategy’s long-term investment criteria
- Small Cap Core’s valuation remains below its historical range despite business fundamentals that remain in line with long-term expectations
- Many businesses are still in the early innings of AI implementation and are exploring how the technology can strengthen competitive positioning while creating new growth opportunities
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.
