Every quarter, our portfolio managers and research analysts provide in-depth analysis and insightful commentary on stock market performance, as well as the latest trends and behaviors impacting the market. We believe their expertise and up-to-date knowledge can help us stay ahead of the curve and make informed decisions for our clients.
At KAR, we are proud to offer a range of high conviction investment strategies that focus on quality businesses, including Small Cap, Mid Cap, Large Cap, Growth, and International strategies. From our perspective, our strategies are designed to be resilient in any market environment, and we believe our results speak for themselves.
In our Q4 2022 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 that you’ll always stay informed and up-to-date on our investment strategies.
You can also read the full Q4 2022 market review in our provided commentary, or revisit our past quarterly recaps:
- 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.
Q4 2022 Stock Market Recap
KAR Chief Investment Officer and Portfolio Manager, Doug Foreman, CFA is optimistic about the economy’s long-term outlook, highlighting the Fed’s hawkish policies in Q4 2022, which appear to be effective in containing inflation. However, the market fears a 2023 recession, and the technology sector has been sluggish. Foreman believes it will be important 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
The Q4 rally in small cap value equities was driven by better-than-expected inflation data and comments made by the Federal Reserve’s Chairman Powell. However, Covid-19 and slow economic growth continue to impact investor concerns over a potential recession. KAR Portfolio Manager Julie Kutasov believes investors should remain focused on quality and seek out differentiated businesses and self-funding entities.
Mid Cap Growth
Chris Armbruster, the Portfolio Manager and Senior Research Analyst for the KAR Mid Cap Sustainable Growth Portfolio, sees signs that inflation is either peaking or has already peaked, which contributed to improved equity returns in Q4 2022. However, he suggests that mid cap growth equities may continue to underperform in the first part of 2023. As for the possibility of a recession, Armbruster believes it will be one of the most anticipated recessions ever, giving the market ample time to prepare. Looking ahead, KAR remains optimistic about investing in innovative companies, especially if a slowdown or recession occurs.
Small Cap Core
After a rollercoaster ride of economic concerns throughout 2022, KAR Portfolio Manager and Senior Research Analyst Jon Christensen notes a positive recovery for small cap stocks in Q4 2022. Christensen expects small cap investing to remain volatile in 2023, but he believes KAR is well positioned to weather the storm with its focus on high-quality businesses that can outgrow their markets long-term.
Mid Cap Core
Q4 2022 signified the end of a volatile year for mid cap stocks, creating cautious optimism for the 2023 Mid Cap Core strategy. The Russell Midcap Index rose by 9.2% during the quarter, with positive news from the market as the Fed’s hawkish interest rate hikes appeared to be working and inflation was peaking. Despite the expectation of a possible recession in 2023, investing in mid cap stocks with solid revenue characteristics may take advantage of the current market volatility and remain profitable long-term.
International Small Cap
Craig Thrasher, Portfolio Manager and Senior Research Analyst for the KAR International Small Cap Portfolio, points to geopolitical turmoil and inflation as major factors affecting international small cap equities in Q4 2022. Thrasher notes that although international small cap investing faced challenging headwinds throughout 2022, recession fears and higher interest rates may create opportunities for investors in certain parts of the market.
Global Dividend Yield
Richard Sherry, Portfolio Manager and Senior Research Analyst for the KAR Global Dividend Yield Portfolio, explains that although the 2023 economy is expected to slow, consumer balance sheets remained healthy in Q4 2022 and travel activity rebounded. Sherry is preparing the KAR Global Dividend Yield strategy for a potential recession in 2023 by focusing on seeking resilient businesses.
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.