The London Company Income Equity Vs. Russell 1000 Q4 2024 Commentary

2025-02-21 08:30:00 ET

Summary

• The London Company Income Equity portfolio declined 2.2% during the quarter vs. a 2.8% increase in the Russell 1000 Index.
• The Income Equity portfolio trailed its benchmark and lagged our expectations of 85-90% upside capture.
• Our portfolios often lag during risk-on environments or when stocks compound at double-digit annual rates.
• Our focus on high returns on capital, balance sheet strength, attractive shareholder yield and valuation helps to reinforce our margin of safety and positions our Income Equity portfolio for success in this uncertain climate.

Market Update

U.S. equities traded higher during 4Q, with most of the major indices posting positive gains. Economic data released during the quarter were positive, but choppy. The Fed's monetary policy continued on a less restrictive path, but shifted a bit more hawkish in December reflecting higher than desired inflation, a strong labor market and better-than-expected GDP growth in recent quarters. The more hawkish view from the Fed led investors to assume fewer rate cuts in the months ahead. The broader market, measured by the Russell 3000 Index, rose 2.6%. Similar to earlier in the year, larger companies with attractive growth profiles led the market. Looking at market factors, Growth, Volatility, and Momentum posted the strongest returns, while Value, Yield, and most Quality factors presented headwinds....

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