In the first quarter of 2026, the Victory RS Global Fund demonstrated resilience amidst a challenging global economic landscape. While global equities, as measured by the MSCI All Country World Index, saw a decline of 3.20%, the Fund managed a more favorable return of -1.24% for its Class A Shares at Net Asset Value. This period was characterized by initial market strength that soon gave way to significant volatility in March, largely influenced by escalating geopolitical tensions in the Middle East. The Fund's investment strategy, guided by a proprietary Quality, Valuation, and Sentiment (QVS) Model, played a crucial role in navigating these turbulent market conditions.
The initial months of 2026 presented a mixed bag for global financial markets. After a period of solid gains, March witnessed a sharp downturn, with global equities falling over 7%. This decline was primarily attributed to the eruption of conflict in the Middle East, which introduced a new layer of uncertainty into the global economic outlook. The escalating tensions raised concerns about energy supplies, inflation, and the potential for broader economic instability, leading investors to adopt a more cautious stance.
Within this environment, the Victory RS Global Fund's approach to portfolio construction and stock selection proved advantageous. The fund aims to identify investment opportunities among over 10,000 global companies through its detailed QVS Model. This model systematically assesses companies based on their quality, valuation metrics, and market sentiment, allowing the fund managers to pinpoint assets with strong fundamentals and attractive growth prospects, even in volatile periods. The fund maintains a disciplined investment philosophy, prioritizing long-term growth and stability over short-term market fluctuations.
Despite the broader market headwinds, specific sectors within the fund's portfolio showed robust performance. Notably, positive stock selection in industries such as Industrials, Energy, Financials, and Materials contributed significantly to the fund's relative outperformance. Conversely, some weakness was observed in Communication Services and Technology sectors. These sectoral dynamics underscore the importance of a diversified portfolio and a rigorous selection process in mitigating risks associated with sector-specific downturns and geopolitical events.
Looking ahead, the global market remains susceptible to various influences. While artificial intelligence (AI) is projected to be a dominant theme driving market innovation and growth in 2026, the ongoing geopolitical situation in the Middle East poses significant risks. Potential ramifications include sustained market volatility, higher energy prices, and possible delays in anticipated interest rate cuts by central banks. The Victory RS Global Fund continues to monitor these developments closely, adjusting its strategies to capitalize on emerging opportunities while safeguarding against potential risks, always adhering to its core QVS investment principles.
