Diamond Hill Large Cap Strategy Q1 2025 Commentary

2025-06-05 05:07:00 ET

Summary

• Markets were mixed in Q1 as the new presidential administration made repeated waves with an avalanche of activity, which left markets uncertain of the likely path forward.
• For the quarter, US stocks fell -4.7% (as measured by the Russell 3000 Index), notching markets’ first quarterly decline since Q3 2023. Mid-cap stocks held up best, falling a more modest -3.4%, while large caps were down -4.5%.
• Our portfolio trailed the Russell 1000 Value Index in Q1. Relative weakness was concentrated among our consumer discretionary exposure — our holdings, as well as our overweight to the sector.

Market Commentary

Markets were mixed in Q1 as the new presidential administration made repeated waves with an avalanche of activity, which left markets uncertain of the likely path forward. For the quarter, US stocks fell -4.7% (as measured by the Russell 3000 Index), notching markets’ first quarterly decline since Q3 2023. Mid-cap stocks held up best, falling a more modest -3.4%, while large caps were down -4.5%. Smaller stocks were hit harder, falling -9.5% — a relatively unsurprising development given smaller companies’ shares are generally more volatile as macroeconomic uncertainty increases. From a style perspective, value fared better up and down the cap spectrum, with large-cap value managing a positive gain of +2.1%. Mid-cap value stocks fell -2.1%, compared to -7.1% for their growth counterparts, while small-cap value stocks declined -7.7% versus -11.1% for small growth (all returns as measured by their respective Russell indices). The shift from growth to value was also relatively unsurprising given the flight to safety prompted by tremendous uncertainty around trade and other fiscal policy shifts in the US....

Read the full article on Seeking Alpha

For further details see: