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

2025-02-21 07:45:00 ET

Summary

• The London Company Income Equity portfolio declined 2.2% during the quarter vs. a 2.0% decrease in the Russell 1000 Value Index.
• The Income Equity portfolio slightly trailed the Russell 1000 Value in 4Q and fell short of our 75-80% downside capture expectations.
• Our focus on high returns on capital, balance sheet strength, and attractive shareholder yield reinforces 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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