A rules-based strategy designed to exploit market inefficiencies in a disciplined systematic manner.
Key Takeaways
- For the quarter ended March 31, 2024, the Voya Corporate Leaders 100 Fund underperformed its benchmark, the S&P 500 Index (the Index) on a net asset value (NAV) basis.
- During the quarter, the Fund continued to follow its strict rules-based investment approach.
- At the beginning of the quarter, the Fund held equal-weighted positions in the stocks of the S&P 100 Index (implying that each holding represented about 1% of the portfolio).
- Over the course of the quarter, if the value of a security increased by more than 50%,* the position size was reduced to 1%, and if the value of a security decreased by more than 30%,* the position was eliminated.
Current strategy and outlook
U.S. stocks enjoyed a strong first quarter as inflation’s downward trend continued and U.S. economic growth beat expectations. The S&P 500 Index reached a new high and advanced by 10.56% on a total return basis during the quarter and the Nasdaq Composite had a price return of 9.11%. The communication services, energy and information technology sectors led, while real estate and utilities lagged. Large-cap stocks outperformed small caps and growth beat value. The Federal Open Market Committee voted to hold interest rates steady for the fifth consecutive time at its March meeting; however, three rate cuts are still expected this year, with the first likely to happen in June.
U.S. bonds slipped during the quarter amid persistently tight credit spreads and a rising U.S. Treasury yield curve. The Bloomberg U.S. Aggregate Bond Index fell –0.78%. The 10-year U.S. Treasury yield rose from 3.95% in January to 4.20% by quarter end on early concerns that lingering high inflation could change the Fed’s rate cut plans; however, it remained essentially flat in March following favorable comments from Fed Chair Powell.
The U.S. economy remains strong, with positive gains in payrolls and productivity. Consumer spending momentum appears soft but stable. Household net worth has increased significantly since the pandemic, but consumer confidence remains below long- term averages due to the lasting negative impact of higher prices on consumers’ psyches. The U.S. labor market remains robust but shows signs of softening. While inflation has fallen to more manageable levels, concerns about overheating persist. Interest rates may remain higher for longer than some participants expect.
The economic soft landing and easier financial conditions, coupled with anticipated rate cuts, should create favorable conditions for U.S. stocks. Although a lot of price appreciation has already taken place and a near-term pullback is possible, there is significant potential for further rally once the Fed starts cutting rates.
Portfolio Review
Over the reporting period, the underweight and stock selection in the real estate sector contributed the most to performance. Secondarily, the overweight to the financials sector contributed. At the individual stock level, underweight positions in Apple Inc. and Tesla, Inc. as well as the overweight position in GE Aerospace are among the key contributors.
By contrast, the stock selection in the industrials sector as well as the underweight and stock selection in the information technology sector detracted. Among the largest individual detractors for the period were the underweight position in NVIDIA Corp., overweight position in Charter Communications, Inc. and underweight in Meta Platforms Inc.
As of the end of the reporting period, the Fund’s largest sector overweight was to the consumer staples sector, while the largest sector underweight was information technology. Sector exposures are purely a function of the strategy’s rules-based investment discipline and are not actively managed.
Holdings Detail
Companies mentioned in this report – percentage of Fund investments, as of 03/31/24: Apple Inc. 0.82%, Tesla, Inc. 0%, GE Aerospace 0%, NVIDIA Corp. 1.10%, Charter Communications, Inc. 0.68% and Meta Platforms Inc. 1.25%; 0% indicates that the security is no longer in the Fund. Portfolio holdings are subject to daily change.
Key Takeaways
For the quarter ended March 31, 2024, the Voya Corporate Leaders 100 Fund underperformed its benchmark, the S&P 500 Index (the Index) on a net asset value (NAV) basis.
During the quarter, the Fund continued to follow its strict rules-based investment approach.
At the beginning of the quarter, the Fund held equal-weighted positions in the stocks of the S&P 100 Index (implying that each holding represented about 1% of the portfolio).
Over the course of the quarter, if the value of a security increased by more than 50%,* the position size was reduced to 1%, and if the value of a security decreased by more than 30%,* the position was eliminated.