Every quarter, our portfolio managers and research analysts provide in-depth analysis and insightful commentary on stock market performance, analyzing the latest trends and behaviors impacting the market. Their expertise and up-to-date knowledge help us stay ahead of the curve and make informed decisions for our clients.
At KAR, we are proud to offer high-conviction investment strategies focusing on quality businesses, including Small Cap, Mid Cap, Large Cap, Growth, and International strategies. We strive to design our portfolio strategies to be resilient in any market environment, and we believe our results speak for themselves.
In our Q1 2023 discussion roundup, you’ll find individual recaps of each of our actively managed strategies, all recorded in our stock market insights podcast, KayneCast. By subscribing to KayneCast, you’ll be automatically notified when future quarterly reviews are made available, ensuring you’ll always stay informed and up-to-date on our investment strategies.
You can also read the full Q1 2023 market review in our provided commentary or revisit our past quarterly recaps:
- Q4 2022 Market Review: Good News, Bad News
- Q3 2022 Market Review: Hiking in a Bear Market
- Q2 2022 Market Review: The Bear is Awake
- Q1 2022 Market Review: A Changing Landscape
To learn more about KAR’s investment management services, contact our team today.
Q1 2023 Stock Market Recap
KAR Chief Investment Officer and Portfolio Manager Doug Foreman, CFA, notes the markets went on a wild ride in Q1 2023. The year began strong, with optimism that an expected recession would be shallow or mild. February’s higher-than-expected inflation data resulted in an economic slowdown; then, the March 2023 banking crisis sent shockwaves through the market. Fears of a hard landing returned, emphasizing the need for investors to be selective and seek out self-financing companies with strong balance sheets that can persevere during volatile markets.
Small Cap Quality Value
Despite a volatile three months, equities performed well in Q1 2023, with the S&P up 7% and NASDAQ up 17%. KAR Portfolio Manager Julie Kutasov believes investors should remain focused on quality and seek out differentiated businesses and self-funding entities, given current market conditions and slowing economic growth.
Small Cap Core
KAR Portfolio Manager and Senior Research Analyst Jon Christensen notes that small cap stocks had quite the rollercoaster during the first quarter, but ultimately ended Q1 2023 well with the Russell 2000 finishing up 2.7%. Christensen expects the market to remain volatile moving into Q2 2023, especially if the banking crisis spreads. He believes KAR should seek out companies with business models that can react and persevere despite volatility.
Mid Cap Core
Q1 2023 saw rapid change in the markets, with January starting in positive territory. February saw markets slow due to inflationary concerns and fears the Fed would keep raise interest rates higher for longer than initially forecasted. Then in March, the banking crisis rattled the market. Despite the volatility, the Russell Mid Cap Index finished the quarter up 4%. Mid Cap Core Portfolio Manager Jon Christensen noted the flight to quality triggered by the banking crisis helped the KAR Mid Cap Core portfolio gain momentum in Q1 2023 but that investors should expect to see continued volatility moving into the second quarter.
International Small Cap
Craig Thrasher, Portfolio Manager and Senior Research Analyst for the KAR International Small Cap Portfolio, notes that continuing inflation and the failure of Silicon Valley Bank, Signature Bank, and Credit Suisse Bank negatively affected international small cap equities in Q1 2023. Thrasher notes volatile economic times, while difficult in the moment, may provide opportunities for long-term investors. The KAR International Small Cap strategy continues to seek high-quality businesses with the potential to weather periods of uncertainty and eventually out-grow their markets.
Global Dividend Yield
Richard Sherry, Portfolio Manager and Senior Research Analyst for the KAR Global Dividend Yield Portfolio, explains that the March banking crisis is likely to prompt the Fed into slowing interest rate increases, which may benefit technology stocks. If the Fed chooses to slow its interest rate cycle it may influence whether the market sees a hard or soft landing in the coming months.
Mid Cap Growth
Chris Armbruster, the Portfolio Manager and Senior Research Analyst for the KAR Mid Cap Sustainable Growth Portfolio, believes that after almost 15 years of interest rates at or near zero, the process of removing that artificial stimulus will be an uneven one for the market. He notes the market ended Q1 2023 in positive territory despite the March banking crisis. In his view, the best approach for the KAR Mid Cap Growth portfolio is to continue to evaluate companies based on their ability to maintain self-funded growth over the long term.
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.