abrdn U.S. Small Cap Equity Fund Q2 2024 Commentary

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The abrdn U.S. Small Cap Equity Fund returned -1.76% for the second quarter of 2024, outperforming the -3.28% return of its benchmark, the Russell 2000 Index.Annual consumer price inflation was higher...

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ACC"},"translate_title":"abrdn美国小型股股票基金2024年第二季度评论","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"ATKR":1,"ATMU":1,"ONTO":1,"PRFT":1,"BOOT":1,"CORT":1,"EQR":1,"FIVN":1,"FROG":1,"HEES":1,"US5Y.BOND":0.9,"US10Y.BOND":0.9,"US12M.BOND":0.9,"US2Y.BOND":0.9,"US30Y.BOND":0.9,"US3Y.BOND":0.9,"US6M.BOND":0.9,"US7Y.BOND":0.9,"MSFT":0.7,"US912797HE00.BOND":0.6,"US912797GL51.BOND":0.6,"US912797GW17.BOND":0.6,"03145":0.6},"content_text":"The abrdn U.S. Small Cap Equity Fund returned -1.76% for the second quarter of 2024, outperforming the -3.28% return of its benchmark, the Russell 2000 Index.Annual consumer price inflation was higher than expected over the first three months of this year before meeting expectations in April and coming in lower than forecast in May.The U.S. Federal Reserve kept the target range for its fed funds rate at a 23-year-high of 5.25-5.50% in June, for the seventh consecutive time.The Fund fell but outperformed its benchmark, the Russell 2000 Index, largely due to stock selection.syahrir maulana Fund performance The abrdn U.S. Small Cap Equity Fund (Institutional Class shares, net of fees) returned -1.76%1 for the second quarter of 2024, outperforming the -3.28% return of its benchmark, the Russell 2000 Index. Sector wise, consumer discretionary, information technology [IT], and financials were the largest outperforming sectors for the Fund. Conversely, the industrials, materials, and energy sectors detracted from performance. At the stock level, Boot Barn Holdings' (BOOT) shares outperformed and added to returns after data points showed a consistent improvement in trends. Brinker International also performed strongly as the company raised guidance due to traffic trends continuing to lead the industry. Meanwhile, Onto Innovation (ONTO) was positive as its shares outperformed after customer TSMC (TSM) increased its outlook for artificial intelligence-related revenues, which was followed up by a strong earnings report from Onto. Conversely, Atkore (ATKR) detracted from performance. Its shares underperformed as destocking and a slower-than-expected production ramp resulted in a guidance cut. H&E Equipment Services' (HEES) shares underperformed after the company's results pointed to weakened demand in construction markets. Meanwhile, Five9 (FIVN) was unfavorable as its shares were weak as investors grew increasingly concerned about the company's ability to accelerate sales in the back half of the year, particularly after Microsoft (MSFT) announced plans to provide an expanded contact center solution. In terms of activity, we initiated Corcept Therapeutics (CORT), a commercial-stage biopharmaceutical company specializing in drugs to treat Cushing's syndrome and other cortisol-related diseases. We believe the company's next-generation drug could allow for increased market penetration. We also initiated Atmus Filtration Technologies (ATMU), a manufacturer of filtration systems for heavy-duty trucks and machines. We believe the company's strength in research and development, along with its expansive product portfolio, could allow it to capitalize on rising air standards. Lastly, we initiated JFrog (FROG), a leader in binary management, which is a core technology in software deployment. We believe this leading position could allow the company to benefit from growth in software builds. Additionally, JFrog's continued shift from a single-solution to a platform provider could support growth over the long term. Conversely, we sold Perficient (PRFT), an IT consulting company, after it agreed to an acquisition by a private firm. Total Returns (as of 06/30/24)     1 month 3 months Year to date 1 year 3 years 5 years 10 years Since Inception   Class A w/o sales charges 0.50 -1.85 2.67 3.98 -1.60 8.43 8.79 9.58   Class A with sales charges -5.26 -7.49 -3.22 -2.00 -3.52 7.15 8.15 9.33   Institutional Class 0.53 -1.76 2.87 4.40 -1.22 8.83 9.16 9.90   Russell 2000 Index -0.93 -3.28 1.73 10.06 -2.58 6.94 7.00 8.14  Annual Calendar Year Returns (as of 12/31/23)    2023 2022 2021 2020 2019 2018 2017 2016 2015 2014   Class A w/o sales charges 11.02 -26.16 30.62 26.95 24.72 -13.37 11.03 23.26 8.29 6.73   Institutional Class 11.46 -25.89 31.09 27.42 25.09 -13.13 11.36 23.68 8.64 7.10   Russell 2000 Index 16.93 -20.44 14.82 19.96 25.52 -11.01 14.65 21.31 -4.41 4.89  \nClick to enlarge  PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. The performance data quoted represents past performance and current returns may be lower or higher. Class A shares have up to a 5.75% front-end sales charge and a 0.25% 12b-1 fee. The investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original cost. To obtain performance information current to the most recent month-end, which may be higher or lower than the performance shown above, please call 866-667-9231 or go to Fund Centre | View all funds | abrdn. Total returns assume the reinvestment of all distributions. Total returns may reflect a waiver of part of the Fund's fees for certain periods since inception, without which returns would have been lower. Indexes are unmanaged and provided for comparison purposes only. No fees or expenses are reflected. You cannot invest directly in an index. \nClick to enlarge Market review U.S. small caps ended lower over the quarter and underperformed the broader U.S. equities asset class. The U.S. economy, particularly the labor market, has continued to prove resilient and robust despite slowing. Consequently, annual consumer price inflation was higher than expected over the first three months of this year before meeting expectations in April, although it came in lower than forecast in May. Meanwhile, heightened tensions in the Middle East have brought additional inflationary risks due to the potential effect on crude supplies and shipping costs. At its June meeting, the Fed kept the target range for its fed funds rate at a 23-year high of 5.25-5.50%, marking the seventh consecutive time it has left rates unchanged. The latest 'dot plot' from the Fed's committee members forecasted just one rate cut in 2024, whereas three had been predicted back in March, with further easing likely in 2025 and 2026. However, after steadily falling over the course of last year, the Fed's targeted inflation measure-the annual core Personal Consumption Expenditures (PCE) Price Index-has only slightly declined in the first five months of 2024. Against this backdrop, Fed Chair Jerome Powell reiterated at the June meeting that the central bank requires more evidence of core PCE inflation sustainably moving towards the 2% target before considering policy easing. Therefore, the Fed aims to maintain a restrictive policy stance, proceeding cautiously with a data-dependent approach as it seeks greater clarity on underlying economic trends. As a result, investors now anticipate only one or two rate cuts in 2024, starting in the autumn at the earliest. Previously, investors had been factoring in as many as six or seven cuts from June onwards. Moreover, some Fed officials are in favor of further tightening to keep stubborn inflation at bay. However, Fed Chair Jerome Powell has stated that the central bank's next move is unlikely to be a rate hike, which has reassured investors somewhat. Otherwise, U.S. corporates' first-quarter reporting season has turned out to be better than expected. In particular, certain technology companies, including several in the semiconductor sector, have continued to outperform consensus expectations given their strong growth prospects in AI. However, the substantial costs of investing in this field remain an investor concern. Small caps (as measured by the Russell 2000 Index) fell 3.3% over the quarter and underperformed large caps (with the Russell 1000 Index up 3.6%). Sector returns within the small-cap market were mostly negative over the quarter. In terms of the style subsectors of the Russell 2000 Index, value fell 3.6% while growth declined 2.9%. Within the U.S. small-cap index, consumer staples notably outperformed the index, as potential rate cuts were expected to support U.S. consumer spending and the broader economy. Utilities outperformed on expectations of potential interest rate cuts later in the year, which would reduce their high debt servicing costs. Additionally, the sector benefited from increased electricity demand driven by the AI boom. Communication services also outperformed the index over the quarter given the sector's defensive attributes amid the broader weakness in U.S. small caps. Financials was another outperformer as the sector benefited from lower interest-rate expectations as credit quality should improve due to lower borrowing costs. The energy, IT, and real estate sectors all performed broadly in line with the index over the quarter. In contrast, consumer discretionary and industrials lagged the index given these sectors' gearing to softer U.S. economic data. Healthcare was also weak, as the prospect of interest rates staying higher for longer weighed on growth companies in the sector. Materials was another underperformer because of various headwinds, including a stronger U.S. dollar and concerns about the outlook for the Chinese economy. Outlook U.S. economic growth has been resilient, but the pace has moderated as a result of slower consumer spending and subdued investments driven by higher interest rates. In line with this, inflation has also slowed in recent months, which we expect to continue with ongoing easing in the labor market, wage growth, and housing inflation. Despite these signs of cooling inflation, the Fed remains cautious in its approach to cutting rates, signaling only one cut for this year. Against this backdrop, the outlook for small-cap stocks remains positive for several reasons. Firstly, small-cap stocks trade at a significant discount compared to their larger counterparts. We expect a broadening out of the market away from the 'Magnificent Seven' as the same fundamental tailwinds driving these stocks higher flows through to the more economically sensitive small-cap companies. Moreover, corporate balance sheets are flush with cash, often triggering merger and acquisition activity, with smaller companies historically benefiting as a result. Finally, an elevated rate environment creates structural advantages for higher-quality companies, a core tenet of the strategy's investment process. These companies are better equipped to handle higher interest rates relative to their lower-quality peers. Altogether, this combination of factors supports our positive outlook for the small-cap strategy.  Footnote [1] The performance quoted represents past performance, which does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted. Performance data current to the most recent month-end may be obtained by calling 800-387-6977 or visiting abrdn.us. Important Information Past performance is no guarantee of future results. Investing in mutual funds involves risk, including possible loss of principal. There is no assurance that the investment objective of any fund will be achieved. Smaller-company stocks are usually less stable in price and less liquid than those of larger, more established companies, and therefore carry greater risk to investors. Investors should carefully consider a fund's investment objectives, risks, fees, charges and expenses before investing any money. To obtain this and other fund information, please call 866-667-9231 to request a summary prospectus and/or prospectus, or download at abrdn.us. Please read the summary prospectus and/or prospectus carefully before investing any money. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. Commentary contained within this document is for informational purposes only and should not be considered as an offer, or solicitation, to deal in any of the investments mentioned herein. abrdn does not warrant the accuracy, adequacy or completeness of the information and materials contained in this document and expressly disclaims liability for errors or omissions in such information and materials. Some of the information in this document may contain projections or other forward-looking statements regarding future events or future financial performance of countries, markets or companies. These statements are only predictions and actual events or results may differ materially. The reader must make his/her own assessment of the relevance, accuracy and adequacy of the information contained in this document, and make such independent investigations, as he/she may consider necessary or appropriate for the purpose of such assessment. Any opinion or estimate contained in this document is made on a general basis and is not to be relied on by the reader as advice. Neither abrdn nor any of its agents have given any consideration to nor have they made any investigation of the investment objectives, financial situation or particular need of the reader, any specific person or group of persons. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of the reader, any person or group of persons acting on any information, opinion or estimate contained in this document. Aberdeen Fund Distributors, LLC is a wholly owned subsidiary of abrdn Inc. abrdn Inc. is a wholly owned subsidiary of abrdn plc. Aberdeen Funds and Aberdeen Investment Funds are distributed by Aberdeen Fund Distributors LLC, Member FINRA and SIPC. 1900 Market Street, 2nd Floor, Philadelphia, PA 19103. ©2024 This material is owned by abrdn or one of its affiliates. This material is the property of abrdn plc and the content cannot be reproduced. \nClick to enlarge Original Post","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.26.4","shortVersion":"4.26.4","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2463280296"}