As the chart above shows, the AIM Class 2016 had a strong
finish to the quarter and generated excess returns. Even with the global
challenges posed on markets as a result of Brexit, the fund generated alpha.
The following chart shows that over the course of the past year, the AIM Small
Cap Fund has struggled (like many active managers) versus the Russell 2000
Index. The same issues that brought challenges to international equities (i.e.
negative interest rates, Brexit, energy price volatility, and currency fluctuations),
have impacted US equities. Both the benchmark and the AIM Small Cap Fund posted
negative returns over the past year.
The AIM Small Cap Equity Fund out-performed the benchmark (Russell
2000 Index) for the second quarter – posting a positive return of 4.38% versus
3.87% for the benchmark.
(Click to enlarge)
The Information Technology, Financials and Materials sectors were
the major under-performers; while Energy, Consumer Staples, Industrials, and
Health Care were the best over-performing sectors. The small cap space is well
known for a high level of volatility and Q2 2016 did not deviate from the norm.
Five stocks (Basic Energy, Malibu Boats, Emergent BioSolutions, SuperMicro
Computer, and John B. Sanfilippo & Son) experienced losses in the quarter
that exceeded -25%. In early July their performance will be re-evaluated and if
the stocks remain below -25% relative return they will be sold and the proceeds
placed into the Russell 2000 ETF. The
second quarter also witnessed some spectacular performance of stocks in the AIM
Equity Fund. Flotek Industries nearly
doubled (+96%), and Exact Sciences +86%, Teladoc +65, and MGP Ingredients +55% had amazing returns. The following table shows all individual
holdings during the quarter by sector and versus the benchmark.
(Click to enlarge)
The table below shows that the portfolio remains relatively sector
neutral per the range established within the AIM investment policy statement. The
Information Technology, Financials and Materials sectors are under-weight
because of the weak relative performance during Q2. The differences in sector
weights are shown with and without the ETF individual holdings allocated to
their respective sectors. The next portfolio sector adjustments will occur in
early September following the students return to campus.
(Click to enlarge)
The next table displays the top 10 holdings as of 6/30/2016. It is
noted that no individual holding exceeds a 3.2% portfolio position.
(Click to enlarge)
The following table shows the key characteristics of the AIM Small
Cap Fund as of 6/30/2016. For the most part, the AIM Small Cap Fund consists of holdings that are of similar quality
as those in the Russell 2000 Index.
(Click to enlarge)
Additional AIM Small Cap Fund characteristics by sector are provided in
the next table.
(Click to enlarge)
The next slide is FactSet's style chart for the AIM Small Cap
Fund.
(Click to enlarge)
The AIM Small Cap Equity Fund should be well positioned for the
remainder of the summer with no significant sector exposure.As soon as the students return to campus they will be presenting new stocks for consideration. Each Friday afternoon there are equity presentations delivered by the AIM students - either in the AIM Room or at area investment companies.
