Small Cap Value Fund Performance – USD (%) (as of 06/30/24)
Cumulative |
Annualized |
|||||
Returns |
2Q24 |
YTD |
1 Yr |
3 Yr |
5 Yr |
10 Yr |
Class I Shares (MUTF:JSCOX) |
-2.92 |
3.10 |
12.96 |
3.36 |
5.46 |
6.49 |
Class T Shares (MUTF:JSCVX) |
-2.96 |
3.01 |
12.87 |
3.26 |
5.35 |
6.37 |
Class N Shares (MUTF:JDSNX) |
-2.88 |
3.15 |
13.12 |
3.51 |
5.61 |
6.63 |
Class A Shares (MUTF:JDSAX) @ NAV |
-3.01 |
2.90 |
12.57 |
3.08 |
5.13 |
6.14 |
Class A Shares @ MOP |
-8.58 |
-3.02 |
6.10 |
1.06 |
3.90 |
5.51 |
Russell 2000® Value Index |
-3.64 |
-0.85 |
10.90 |
-0.53 |
7.07 |
6.23 |
Returns quoted are past performance and do not guarantee future results; current performance may be lower or higher. Investment returns and principal value will vary; there may be a gain or loss when shares are sold. For the most recent month-end performance call 800.668.0434 or visit Products – US Advisor. Maximum Offering Price (MOP) returns include the maximum sales charge of 5.75%. Net Asset Value (NAV) returns exclude this charge, which would have reduced returns. Expense Ratios (% as of most recent prospectus) Class I: Gross 0.74, Net 0.74 Class T: Gross 0.82, Net 0.82 Class N: Gross 0.57, Net 0.57 Class A: Gross 1.14, Net 1.10 Net expense ratios reflect the expense waiver, if any, contractually agreed to for at least a one-year period commencing on October 27, 2023. This contractual waiver may be terminated or modified only at the discretion of the Board of Trustees. Not all Funds and Share classes may be available. Please consult your financial professional. |
Investment environment
Broader measures of the U.S. equity market, like the S&P 500® Index (SP500, SPX) , ended the second quarter higher as moderating inflation raised hopes for Federal Reserve (Fed) rate cuts in the second half of the year. Meanwhile, various other indices were lower in the period. Economic news generally was positive despite weakness in residential construction and strain on the consumer. The market advance was narrow, driven by large-cap growth stocks with exposure to artificial intelligence. Small- and mid-cap stocks underperformed their larger peers. Overall, value stocks lagged behind growth stocks. The Russell 2000® Value Index posted negative returns for the quarter, with the largest declines in the healthcare and consumer discretionary sectors. The utilities and financials sectors outperformed with smaller declines.
Portfolio review
Stock selection drove relative outperformance for the quarter, especially in the information technology sector. Fabrinet (FN), a top relative contributor that makes optical packaging and precision equipment used in semiconductor production, rose on strong AI-related customer sales and expectations that telecommunications spending gradually would improve.
Kirby Corporation (KEX) was a notable performer in the industrials sector. As a leading U.S. tank barge operator, Kirby transports petroleum products and other bulk liquids. The company delivered better-than-expected earnings, supported by its strong competitive position, pricing power, and limited industry supply.
Device manufacturer Globus Medical (GMED) was another contributor. The stock has faced headwinds in recent quarters because of uncertainty around its acquisition of device maker NuVasive. The integration with NuVasive proceeded better than expected, and the stock rebounded in the second quarter following strong earnings as investors became more optimistic regarding the synergies offered by the merger.
Medical supplies company Owens & Minor (OMI) was a prominent detractor. The stock sold off after the company warned of lower free cash flow for the coming year. As a result, it also announced a change to its chief financial officer. We remain invested but are closely monitoring its execution.
Macroeconomic uncertainty pressured several holdings, including sporting goods retailer Academy Sports + Outdoors (ASO). While we believe Academy has a strong franchise, it has faced headwinds due to slower consumer spending, especially on the low end. We continue to believe that the company has positive reward-to-risk given its discounted valuation and the actions it has taken to improve results.
Heavy equipment rental company H&E Equipment Services (HEES) was another detractor, reporting weaker revenue growth because of lower rental and utilization rates. We continue to own shares of the company but have reduced other positions where we see increased economic sensitivity.
The portfolio ended the quarter overweight in the industrials, information technology, materials, and consumer staples sectors. It was underweight in healthcare, utilities, communication services, real estate, consumer discretionary, financials, and energy.
Manager outlook
For several quarters we have cautioned about the prospects of higher-for-longer interest rates, especially as inflation has not moderated as quickly as policymakers would like.
Economic growth has remained quite resilient in the face of higher interest rates but has started to show signs of cooling. We have seen more evidence that higher inflation is cutting into consumer spending, especially for lower-end households. While the job market has remained healthy, the unemployment rate has ticked higher over the past year.
Signs of slower economic growth may persuade the Fed to reduce interest rates, with the market now pricing in one or two rate cuts by year-end. While investors may welcome this development, we caution that equities have historically struggled during periods of sharp Fed rate cuts, especially if the economy slows meaningfully, the unemployment rate rises, or there is some type of market-related mishap.
Additionally, we see other sources of potential market volatility, including election uncertainty, geopolitical tensions, and weaker overseas economies. There are also risks related to the market’s recent euphoria surrounding AI – related companies, as mega-cap AI-related stocks have overshadowed other compelling investments in the small- and mid-cap arena. As usual, we remain on the lookout for opportunities to use this environment to our advantage, as we seek compelling investments that may be missed by other investors. We remain committed to our core process of seeking out well-managed and attractively valued companies with proven earnings growth, strong free cash flow, and low debt levels that help them navigate potential economic challenges.
Portfolio
Top Contributors (%) |
Average Weight |
Relative Contribution |
Top Detractors (%) |
Average Weight |
Relative Contribution |
Kirby Expl Co. |
2.33 |
0.59 |
Owens & Minor Inc Ne |
1.41 |
-0.81 |
Piper Jaffray Cos |
2.24 |
0.41 |
H & E Equipment Serv |
1.13 |
-0.36 |
Fabrinet |
1.32 |
0.40 |
Academy Sports & Outdoo |
1.62 |
-0.32 |
Globus Med Inc |
1.33 |
0.37 |
Hillenbrand Inc (HI) |
1.70 |
-0.29 |
Coca Cola Bottlng Co |
1.07 |
0.30 |
Enovis Corporation (ENOV) |
0.94 |
-0.26 |
The holdings identified in this table, in compliance with Janus Henderson policy, do not represent all of the securities purchased, held or sold during the period. To obtain a list showing every holding as a percentage of the portfolio at the end of the most recent publicly available disclosure period, contact 800.668.0434 or visit Products – US Advisor. Relative contribution reflects how the portfolio’s holdings impacted return relative to the benchmark. Cash and securities not held in the portfolio are not shown. |
Top Holdings (%) |
Fund |
Chord Energy Corp (CHRD) |
3.00 |
Piper Sandler Cos (PIPR) |
2.49 |
Kirby Corp |
2.35 |
Ameris Bancorp (ABCB) |
2.30 |
STAG Industrial Inc (STAG) |
2.25 |
Axis Capital Holdings Ltd (AXS) |
2.20 |
Fulton Financial Corp (FULT) |
2.13 |
Commercial Metals Co (CMC) |
2.09 |
Encore Wire Corp |
2.02 |
Eastern Bankshares Inc (EBC) |
1.85 |
Total |
22.68 |
Definitions Volatility measures risk using the dispersion of returns for a given investment. Free cash flow (‘FCF’) yield is a financial ratio that measures how much cash flow a company has in case of its liquidation or other obligations by comparing the free cash flow per share with the market price per share and indicates the level of cash flow the company will earn against its share market value. Please consider the charges, risks, expenses and investment objectives carefully before investing. For a prospectus or, if available, a summary prospectus containing this and other information, please call Janus Henderson at 800.668.0434 or download the file from Products – US Advisor. Read it carefully before you invest or send money. Performance for Class T Shares that includes periods prior to 4/21/03 reflects the performance of one or more share classes of a predecessor fund. See the Fund’s prospectus for further details. Performance for Class N Shares that includes periods prior to 5/31/12 reflects the performance of one or more share classes of the Fund or a predecessor fund. See the Fund’s prospectus for further details. Returns include reinvestment of dividends and capital gains. Discussion is based on the performance of Class I Shares. This Fund has a performance-based management fee that may adjust up or down based on the Fund’s performance. Closed to certain new investors. The opinions are as of 06/30/24, are subject to change and may not reflect the views of others in the organization. Janus Henderson may have a business relationship with certain entities discussed. The comments should not be construed as a recommendation of individual holdings or market sectors, but as an illustration of broader themes. Holdings are subject to change without notice. For equity portfolios, relative contribution compares the performance of a security in the portfolio to the benchmark’s total return, factoring in the difference in weight of that security in the benchmark. Returns are calculated using daily returns and previous day ending weights rolled up by ticker, gross of advisory fees, may exclude certain derivatives and does not represent actual performance. There is no assurance the stated objective(s) will be met. Investing involves risk, including the possible loss of principal and fluctuation of value. Real estate securities, including Real Estate Investment Trusts (REITS), are sensitive to changes in real estate values and rental income, property taxes, interest rates, tax and regulatory requirements, supply and demand, and the management skill and creditworthiness of the company. Additionally REITs could fail to qualify for certain tax-benefits or registration exemptions which could produce adverse economic consequences. Smaller capitalization securities may be less stable and more susceptible to adverse developments, and may be more volatile and less liquid than larger capitalization securities. Value stocks can continue to be undervalued by the market for long periods of time and may not appreciate to the extent expected. Initial Public Offerings (IPOs) are highly speculative investments and may be subject to lower liquidity and greater volatility. Special risks associated with IPOs include limited operating history, unseasoned trading, high turnover and non-repeatable performance. Actively managed investment portfolios are subject to the risk that the investment strategies and research process employed may fail to produce the intended results. Accordingly, a portfolio may underperform its benchmark index or other investment products with similar investment objectives. Russell 2000® Value Index reflects the performance of U.S. small-cap equities with lower price-to-book ratios and lower forecasted growth values. Index performance does not reflect the expenses of managing a portfolio as an index is unmanaged and not available for direct investment. Mutual funds distributed by Janus Henderson Distributors US LLC. Janus Henderson is a trademark of Janus Henderson Group plc or one of its subsidiaries. © Janus Henderson Group plc. |
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