Aristotle Capital Management, LLC, an investment management company, released its "Core Equity Fund" Q2 2026 investor letter. A copy of the letter can be downloaded here. The fund returned 14.69% in the second quarter of 2026, slightly trailing the 15.20% gain of the S&P 500 Index as market performance remained highly concentrated in artificial intelligence (AI)-related companies.
The quarter was marked by strong equity market gains, with the S&P 500 reaching new record highs, while the Bloomberg U.S. Aggregate Bond Index advanced 0.67%. Economic conditions remained resilient, with unemployment at 4.2%, inflation easing to 3.5% year-over-year in June from 4.2% in May, and real GDP growth accelerating.
The fund noted that AI-driven investment in semiconductors, memory, and data-center infrastructure continued to dominate market returns, creating significant performance dispersion across sectors. During the quarter, the managers increased exposure to areas benefiting from the AI infrastructure buildout and broader computing demand while reducing positions where growth prospects and valuation support appeared less compelling. Looking ahead, the fund remains constructive on equities, citing continued earnings growth, reasonable forward valuations, and long-term opportunities tied to AI, cloud computing, semiconductor demand, and other secular growth trends, although geopolitical tensions, persistent inflation, and the possibility of future Federal Reserve rate hikes remain key risks.
In addition, please check the Fund's top five holdings to know its best picks in 2026. In its second-quarter 2026 investor letter, Aristotle Capital Management's Core Equity Fund highlighted stocks like Boston Scientific Corporation (NYSE:BSX). Boston Scientific Corporation (NYSE:BSX) develops and manufactures medical devices used in minimally invasive procedures across a wide range of healthcare specialties.
The one-month return of Boston Scientific Corporation (NYSE:BSX) was 17.65% while its shares traded between $42.20 and $09.50 over the last 52 weeks. On August 14, 2026, Boston Scientific Corporation (NYSE:BSX) stock closed at approximately $51.83 per share, with a market capitalization of about $74.66 billion. Aristotle Capital Management's Core Equity Fund stated the following regarding Boston Scientific Corporation (NYSE:BSX) in its Q2 2026 investor letter: We sold Boston Scientific Corporation (NYSE:BSX) on concerns around continued pressure in its two growth engines: the Watchman device and Farapulse.
Despite good data in the Champion trial, hesitation around the use of Watchman has resulted in declining growth rates. Changes to the modality of implantation are also pressuring Watchman growth. Farapulse, while a clear leader in pulse field ablation (PFA), is experiencing slower growth rates due to competitive entrants.
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