Summary
- Market Environment: The S&P 500 declined -4.27% in Q1 amid tariff concerns and policy uncertainty from Washington, prompting a broad shift toward stability and quality.
- Sector Leadership: Energy, Health Care, and Consumer Staples led the market with positive returns, while Consumer Discretionary, Technology, and Communication Services experienced meaningful declines.
- Performance: The Johnson Equity Income Composite delivered a +0.99% net return, significantly outperforming the broader market during a challenging quarter.
- Sector Allocation: Relative performance benefited from underweights in Technology and Communication Services and overweights in Financials, Energy, Health Care, and Utilities.
- Stock Selection: Disciplined security selection—particularly within sectors dominated by the “Magnificent 7”—further contributed to outperformance.
- Outlook: With markets increasingly concentrated in a small group of mega-cap tech stocks and trade policy volatility rising, the strategy remains focused on active management, high-quality companies, and attractive valuations to protect and grow capital through market uncertainty.
Video Transcript
Hello, and thank you for joining us for a quick update on the Johnson Equity Income Fund's first-quarter performance.
The S&P 500 declined by 4.27% in the first quarter, driven primarily by investor concerns about tariffs and policy uncertainty coming out of Washington.
Investors responded by shifting towards stability and quality, significantly impacting sectors that had recently performed well.
Energy, Health Care, and Consumer Staples emerged as the best-performing sectors, posting positive returns of approximately 10%, 6.5%, and 5%, respectively.
Conversely, Consumer Discretionary, Technology, and Communication Services saw significant declines, ranging from about 6% to nearly 14%.
I'm pleased to share that our Johnson Equity Income Composite delivered a positive return of 0.99%, net of fees, significantly outperforming the broader market.
This outperformance was driven by strategic sector allocation—we maintained meaningful underweights in Technology and Communication Services, and overweights in Financials, Energy, Health Care, and Utilities.
Additionally, careful stock selection, particularly in sectors dominated by the so-called "Magnificent 7" stocks, further boosted our relative performance.
Looking ahead, recent trade policy developments—especially the aggressive new tariffs announced at quarter-end—have introduced substantial volatility.
With the market heavily concentrated in a few major tech names, these changes underscore the value of active management and a disciplined investment strategy.
As always, our focus remains firmly on investing in high-quality companies with attractive valuations, helping to protect and grow your capital even during turbulent times.
Thank you for your continued trust, and please reach out with any questions.
Published 04/21/2025
Johnson Asset Management (JAM) is a division of Johnson Investment Counsel, Inc. (“JIC”), an independent and privately owned Midwestern based investment advisory firm registered with the Securities and Exchange Commission. Johnson Asset Management manages institutional separate account portfolios for a wide variety of for-profit and nonprofit organizations, public agencies, public and private retirement plans, and personal trusts of all sizes. It may also serve as sub-adviser for mutual funds. JIC’s fees are available upon request and may be found in our Form ADV Part 2A. Performance data quoted herein represents past performance. Past performance does not guarantee or indicate future results. All data is current as of March 31, 2025 unless otherwise noted. Returns and net asset value will fluctuate. To determine if this strategy is appropriate for you, carefully consider the investment objectives, risk factors, and expenses before investing. Individual account management and construction will vary depending on each client's investment needs and objectives. Investments employing JIC’s strategies are NOT insured by the FDIC or by any other Federal Government Agency, are NOT Bank deposits, are NOT guaranteed by any Bank or any Bank affiliate, and MAY lose value, including possible loss of principal. Johnson Asset Management claims compliance with the Global Investment Performance Standards. The Institutional Core composite includes all fee paying, fully discretionary, actively managed institutional fixed income portfolios with a minimum value of $500,000 and an investment objective of broad investment grade, taxable fixed income, benchmarked against the Bloomberg U.S. Aggregate Index. The US Aggregate Bond Index is a broad-based flagship benchmark that measures the investment grade, US dollar denominated, fixed-rate taxable bond market.
JAM’s policies for valuing portfolios, calculating performance and preparing compliant presentations, as well as a complete list of composite descriptions are available upon request. Please contact our office at 513.389.2770 or 3777 West Fork Road, Cincinnati, OH 45247. All returns reflect the reinvestment of investment income (dividends and/or interest) and capital gains. Valuations and returns are stated in U.S. dollars. Trade date accounting is used. Portfolio returns are calculated using time weighed return methodology on a monthly basis. Net returns shown reflect gross performance less the highest fee schedule for this strategy. Actual client returns would also be reduced by brokerage commissions, custodial fees, and other client paid expenses detailed in JIC’s Form ADV Part 2A.
