**Investment Insights: Navigating Market Volatility**
As we navigate the complexities of the current market landscape, it’s essential to stay focused on long-term goals and adapt to changing conditions. The Pioneer Core Equity Fund, a high-quality, sustainable US large-cap strategy, aims to maximize risk-adjusted returns over a full market cycle.
**Market Review**
In the second quarter of 2024, the S&P 500 Index returned 4.28%, driven by enthusiasm for artificial intelligence and the strong performance of the “Magnificent Seven” stocks. Growth stocks outperformed value stocks, with the Russell 1000 Growth Index returning 8.33% compared to the -2.17% return of the Russell 1000 Value Index. The S&P 500 Equal Weighted Index, which measures the performance of all stocks equally, returned -2.63%.
**Portfolio Performance**
The Pioneer Core Equity Fund underperformed the S&P 500 Index in the quarter, primarily due to weaker security selection in the information technology, communication services, and consumer discretionary sectors. However, positive security selection in healthcare, energy, and materials contributed to relative performance. The fund’s decision to avoid owning Nvidia, a leading manufacturer of graphic processing units, due to valuation concerns, was a significant detractor.
**Portfolio Positioning**
The fund’s largest overweight allocations are in materials, financials, and energy, while the largest underweights are in information technology, healthcare, and industrials. The portfolio has a meaningful overweight in financial services, where we own non-spread financials that are not subject to interest rate or credit risks. In healthcare, our biggest conviction is in the equipment and services segment, as we believe hospital surgical procedures will remain strong.
**Outlook**
We remain cautious, as elevated valuations reflect an optimistic outcome with respect to the economy, interest rates, inflation, the federal debt, and the elections. While the valuation gap between top and average stocks is still growing, we believe the fundamentals behind the top stocks do not support such a large valuation differential, and the market could be set to normalize. We are focused on bottom-up, fundamental stock picking and opportunistically taking advantage of market volatility to pursue investments in high-quality names whose valuations are meaningfully below where we think they should be.
**Investment Philosophy**
Our investment approach is centered around identifying high-quality, sustainable companies trading at attractive valuations with the goal of maximizing risk-adjusted returns over a full market cycle. We believe in the importance of active management, separating strong performers from the rest of the market, and adapting to changing market conditions.
**Risk Considerations**
Investing in the markets involves risks, including the potential for loss of principal. Market prices can fluctuate rapidly and unpredictably, and general market conditions can affect the value of securities. Investing in foreign and/or emerging markets securities involves additional risks, including currency exchange rates, economic, and political conditions. It is essential to carefully consider your investment objectives, risk tolerance, and time horizon before investing.
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