US Equity Strategy - Mid Cap Core_Mid Cap Core Manager Performance - January 2025

Summary of US Equity Strategy - Mid Cap Core Conference Call Company and Industry - Company: UBS Securities LLC - Industry: US Mid Cap Equity Strategy Key Points and Arguments Manager Performance Overview - Mid Cap Core managers underperformed the Russell Mid benchmark by -0.5% in 2024, achieving a return of 14.8% compared to the benchmark's 15.3% [1] - In 4Q24, managers lagged by -0.5%, despite a positive performance in December [1] Sector vs. Stock Impact - Sector decisions contributed positively, adding +1.1% to performance in 2024, with Financials and Industrials adding 0.9% and 0.6% respectively [2] - Underweighting Utilities, which performed strongly, resulted in a -0.5% drag on performance [2] - Stock selection negatively impacted performance by -1.6%, with underweights in PLTR and APP costing -52 bps and -40 bps respectively [2] 4Q24 Performance Insights - Sector decisions added +0.7% to 4Q performance, while stock selection detracted -1.2% [3] - Technology and Communications sectors were the main detractors, particularly the underweight in PLTR costing -54 bps [3] Factor Performance - Funds focusing on Price Momentum and Beta to the Economy outperformed by 8.2% and 7.8% respectively in 2024 [4] - In 4Q24, managers emphasizing stocks with high Beta to the Market and lower P/Es experienced favorable market conditions [4] Detailed Performance Metrics - Manager average return for 2024 was 14.8%, while the benchmark return was 15.3%, resulting in a -0.5% difference [8] - The 1st Quartile managers achieved a return of 20.3% in 2024, significantly outperforming the average [8] Sector Performance Attribution - In 2024, the Financials sector had a notable return of 29.8% for managers, contributing +0.8% to overall performance [11] - The Technology sector saw a return of 17.9%, but stock selection within this sector detracted from overall performance [11] Top and Bottom Contributors - Top contributors in 4Q24 included Marvell Tech (53.3% return) and TX Pac Land (25.1% return) [13] - Bottom contributors included Palantir Technologies (-103.3% return) and AppLovin (-148.1% return) [13] Overall Market Trends - The report indicates a trend of underperformance in certain sectors, particularly Technology, which may present risks for investors [3][4] - The analysis suggests that a focus on sector allocation and stock selection is crucial for improving manager performance in the future [2][4] Additional Important Insights - The report emphasizes the importance of understanding the impact of sector decisions versus stock selection on overall performance [2][3] - It highlights the need for managers to adapt strategies based on market conditions and sector performance to enhance returns [4][11]