“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.