Aperture Discover Equity Fund: Commentary for Q4 2023

Quarter in review

The fourth quarter of 2023 was a volatile period for the Fund and the equity market in general. Higher interest rates combined with tax loss selling created a small cap selloff in October, which sharply reversed positively during November and December. This volatility correlated with expectations around rates, reflecting a persistent FY23 trend where equities displayed heightened sensitivity to interest rate fluctuations. Fed Chair Powell’s November commentary appears to have signaled a market regime change after roughly two years of restrictive monetary policy.

Reflecting on Q4 and 2023 performance and volatility, we think it’s prudent to review the ultimate goals of the strategy. Our objective is to craft a focused portfolio of well-positioned companies poised for positive and dynamic changes over a multi-year period. We strive to initiate these positions at attractive valuations with the aim of generating a compelling return stream over time. As a result, we generally focus on areas of the market where companies are best able to align with that criterion. In our experience, consumer discretionary, information technology, industrials, healthcare, and materials sectors can be driven by idiosyncratic company specifics. While we take short and intermediate term market conditions into consideration, our primary objective is to generate meaningful alpha generation over a market cycle. As a result, some market environments are less optimal for our style of investing. 

Download the full commentary below: