A Quarter Review
The S&P 500 declined -4.3% during the first quarter. Through the first two months of the quarter, large cap value significantly outperformed large cap growth (12.1%) supported by improving PMIs and lower rates, factors that favor more cyclical areas of the market. The rotation was further amplified by AI disintermediation concerns within the software industry that pushed investors toward seemingly more insulated business models. These factors led to a broadening of markets to start the year.
The narrative changed course at the start of March as oil and inflation fears tied to the Iran conflict came to dominate the market. As a result, all sectors in the index (ex. Energy) were down during the final month of the quarter.
For the full quarter, the top performing sectors were Energy (38.2%), Materials (9.7%), and Utilities (8.3%). The worst performing sectors were Financials (-9.3%), Consumer Discretionary (-9.2%), and Technology (-9.1%).
Performance Summary
The Johnson Equity Income Composite posted a return of -2.8%, net of fees, outperforming the aforementioned -4.3% return of the S&P 500 in the first quarter. Sector positioning was broadly positive across the Composite, leading to a sizeable positive allocation effect during the quarter. An Energy overweight was by far the biggest tailwind given the magnitude of sector outperformance during the quarter. This was followed by an underweight to Technology, which was one of the worst sectors during the quarter. Overweights to Utilities and Industrials were also tailwinds to relative performance, with both sectors posting positive returns during the quarter.
Security selection detracted from relative performance during the quarter, with the largest drags stemming from software holdings and not owning the largest name in the Energy sector, where the fund’s relatively defensive posture was a drag. Software selection was also challenged in Technology, due to the Composite’s overweight positioning in software and services. Software multiples have significantly compressed year-to-date as investors have grown increasingly concerned about AI disruption risk.
This has resulted in a largely indiscriminate selloff, creating compelling opportunities to upgrade the portfolio’s quality profile in the industry at multiples that have not been available in years.
1) Past performance is not indicative of future results, and there is a risk of loss of all or part of your investment. The above does not represent all holdings in the Strategy. Holdings listed might not have been held for the full period. To obtain a copy of Johnson Asset Management’s calculation methodology and a list of all holdings with contribution analysis, please contact your service team. The data provided is supplemental. Please see important disclosures at the end of this document.
2) Holdings are subject to change. Past performance is not indicative of future results, and there is risk of loss of all or part of your investment. The data provided is supplemental. Please see disclosures at the end of this document
Market Outlook and Portfolio Positioning
Looking ahead, we will continue to monitor market developments closely and adjust accordingly to align with our long-term objectives. Those objectives are a focus on capital protection as well as enhancing the spending power of capital over time. We view the combination of a consistent valuation discipline and quality focus as the best means to reach those aims, regardless of the prevailing market environment.
The Johnson Equity Income Strategy seeks to outperform the S&P 500 over a full market cycle with a disciplined quality framework that provides investors with long-term capital growth, above average shareholder yield and reduced volatility through downside protection. For more information on our products and services, please contact a member of our Sales & Client Service Team at 513.389.2770 or info@johnsonasset.com.
Published 04/23/2026
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 non-profit 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, 2026 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 Investment Counsel claims compliance with the Global Investment Performance Standards. The Equity Income composite includes all fee paying, fully discretionary, actively managed equity portfolios with a minimum value of $500,000 and an investment objective of Equity Income, benchmarked against the S&P 500 Index. The S&P 500 Index is a broad-based flagship benchmark that measures the performance of the largest companies listed on US stock exchanges. JIC’s policies for valuing portfolios, calculating performance and preparing compliant presentations, as well as a complete list of composite descriptions are available upon request. GIPS® is a registered trademark of CFA Institute. CFA Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of the content contained herein. 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.
