Summary
- Performance: Johnson Equity Income gained 4.87% net of fees in Q3, trailing the S&P 500 by 3.25%.
- Market Headwinds: Narrow, growth-led leadership—driven by large-cap technology—created style challenges.
- Sector Impact: Underweights in Information Technology and Communication Services detracted, while an underweight in Real Estate added value.
- Positioning Effect: An overweight in Financials modestly weighed on results.
- Stock Selection: Limited exposure to mega-cap tech hurt relative returns, partially offset by strong gains in select industrial and energy holdings.
- Outlook: The strategy remains focused on long-term total return through diversification, quality companies, durable cash flows, and disciplined risk management.
Video Transcript
Hello, I’m Charles Rinehart and I’m here with an update on the Johnson Equity Income Strategy’s performance for the third quarter of 2025.
The Johnson Equity Income Composite gained 4.87% net of fees in the third quarter.
While the portfolio delivered a strong absolute return, it underperformed the S&P 500 by 3.25%.
Style headwinds were significant, as market leadership remained narrow and growth-oriented, concentrated in a handful of large-cap technology names.
As a result, both sector allocation and stock selection detracted from relative performance, with most of the weakness centered in the technology segment.
From a sector-allocation standpoint, an underweight in Real Estate added value, as that sector trailed the broader market.
However, those gains were offset by underweights in Information Technology and Communication Services, both of which outperformed.
An overweight in Financials, which lagged the market, also weighed modestly on results.
From a stock-selection perspective, results were mixed.
Relative weakness stemmed primarily from limited exposure to the largest technology companies, which dominated index performance during the quarter.
At the same time, several diversified industrial and energy holdings posted strong double-digit gains, helping to cushion overall results.
Looking ahead, we remain focused on achieving long-term total return and disciplined risk management through broad diversification.
Our investment approach continues to emphasize high-quality companies with durable cash flows, attractive valuations, and positive shareholder yields that can compound wealth over time.
Thank you for your continued trust and partnership, and please don’t hesitate to reach out to our team with any questions.
Published 10/21/2025
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 September 30, 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.
