Aristotle Capital Management, LLC, an investment management company, released its "Value Equity Fund" Q2 2026 investor letter. A copy of the letter can be downloaded here. The Fund delivered a 4.32% total return in Q2 2026, underperforming the 13.87% gain for the Russell 1000 Value Index and the 15.20% return for the S&P 500, while its 1.99% year-to-date return also lagged the Russell 1000 Value Index's 16.26% and the S&P 500's 10.21%.
The Fund attributed the performance gap largely to limited exposure to the AI infrastructure spending boom, noting that the U.S. has about 4,000 existing data centers and nearly 3,000 more planned or under construction, while AI-related demand has created bottlenecks in processors and memory. The letter highlighted the scale of the cycle, with industry cash flows in key AI hardware areas rising sharply, while the Russell 1000 Value Index's top 10 contributors gained an average 182% year to date and accounted for 9.29 percentage points of the index's 16.23% return. Looking ahead, the fund expects investors to eventually reassess the sustainability of current AI infrastructure earnings and valuations.
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 Value Equity Fund highlighted stocks like Corteva, Inc. (NYSE:CTVA). Corteva, Inc. (NYSE:CTVA) provides advanced seeds, crop protection products, and agricultural technologies designed to improve farm productivity and resilience.
The one-month return of Corteva, Inc. (NYSE:CTVA) was 4.69% while its shares traded between $60.54 and $90.97 over the last 52 weeks. On August 27, 2026, Corteva, Inc. (NYSE:CTVA) stock closed at approximately $82.88 per share, with a market capitalization of about $54.98 billion. Aristotle Value Equity Fund stated the following regarding Corteva, Inc. (NYSE:CTVA) in its Q2 2026 investor letter: Corteva, Inc. (NYSE:CTVA), the seed and crop protection company, was one of the largest detractors during the period.
While fundamentals remained healthy, with first-quarter FREE cash flow supported by strength in both Seed and Crop Protection, the stock lagged a sharply rising market as investors focused on Corteva's more tempered outlook for the balance of the year. The management team cited potential second-half headwinds from tariffs, higher oil-related input costs, farmer fuel expenses, and competitive crop protection pricing in Latin America and Asia. We believe the market also weighed the near-term complexity of Corteva's planned fourth-quarter separation into New Corteva and Vylor, including potential dis-synergies from operating two public companies.
Nevertheless, our investment thesis remains intact. Farmers continue to adopt Corteva's latest hybrids, varieties, and premium crop protection technologies, supporting Corteva's margin expansion. Meanwhile, the company's R&D-led innovation, disciplined cost management, and path toward net royalty income should enhance its long-term competitive position.
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