Victory Trivalent International Small-Cap Fund Q1 2025 Commentary

2025-06-26 10:06:00 ET

Market Environment

International small-cap equities rose in the first quarter despite looming U.S. trade tariff announcements and the emergence of DeepSeek, a cost-efficient artificial intelligence model developed by a Chinese start-up. For the quarter, the S&P® Developed Ex-U.S. SmallCap Index rose 3.2%, while the Victory Trivalent International Small-Cap Fund ( MISAX )(Class A shares at NAV) outperformed the benchmark. There was wide dispersion among country returns in the Index, with European equities posting the strongest gains on improving sentiment over the possibility of a ceasefire in Ukraine. Portugal advanced 22.9% as global rating agency S&P upgraded its credit rating on a more positive outlook. Spain was up 18.8% as its economy expanded more than expected due to strong consumption, increased tourism, and higher exports. Austria rose 16% as its centrist parties agreed to form a coalition government. Germany gained 8.6% following Parliament’s approval of a robust infrastructure and defense spending plan, bolstering the stability of a fragile transatlantic alliance. On the downside, Israel fell 7.2% after escalating its conflict with Hamas following a tentative ceasefire. Ireland and Australia were down 2.3% and 2.1%, respectively, as their export-driven economies face heightened uncertainty over global trade tensions....

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