Having the Flexibility to Sin a Little
At the start of 2026, markets provided a clear reminder of why we are evidence-based investors.
In January, the small and value premium hit historically high levels, with small-value stocks outperforming large-growth stocks by 6.6%1. When we place these returns in context, they fall in the 94th percentile1 of observed US monthly small-value premiums. These are not everyday events, and when they do occur, it’s important that the portfolio is positioned properly to capture them.
Why We Leaned In
As one may expect from valuation theory, small-value premiums tend to be larger when the gap between expensive growth stocks and cheaper value stocks is wider. Decades of evidence suggest that when these spreads are large, the expected return to value investing increases.
This was exactly the environment we saw throughout 2025 and entering 2026: historically wide valuation spreads. Rather than maintaining a static allocation, our approach allows us to adjust exposure to opportunities.
When valuation spreads are wide:
- Expected returns to value increase
- The opportunity set becomes more attractive
- Increasing exposure can improve long-term outcomes
This led us to intentionally tilt more heavily toward small and value stocks throughout 2025 and so far in 2026.
The Result
Because we were positioned in advance, the portfolio was able to capture more of the premium when it appeared.
Over this month alone, the strategy outperformed the market by 2.7%2.
This was not the result of a short-term prediction. It was the result of a systematic, evidence-based process that adjusts exposure when expected returns are higher.
The performance data quoted represents past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than their original cost and current performance may be lower or higher than the performance quoted. Performance current to the most recent month-end can be obtained by calling 314-448-4023.
Why Structure Matters
Opportunities like this are rare and can make a meaningful difference in clients’ long-term outcomes. Capturing these opportunities requires thoughtful implementation.
Larger strategies can face constraints:
- Capacity limitations
- Trading frictions
- Slower portfolio adjustments
By contrast, our structure allows us to remain nimble, adjusting exposures efficiently when the data supports it. This flexibility is not about reacting to markets. It is about being prepared when the opportunity is there.
The Takeaway
While expected value premiums are always positive, they are not always constant. They are time-varying and tend to be strongest when valuation spreads are most extreme.
A dynamic approach allows us to:
- Increase exposure when expected returns are higher
- Stay disciplined when opportunities are less compelling
- Capture more of the premium over time
Early 2026 was a clear example of this process at work.
1 As measured by the Fama/French US Small Value Research Index – Fama/French US Large Growth Research Index monthly returns.
2 As compared to the funds benchmark the Bloomberg 3000. For standardized returns please see: https://longviewresearchpartners.com/ebi/fund-data/
You should consider the investment objectives, risks, and charges and expenses carefully before you invest in the Longview Advantage Fund (the “Fund”). The Fund’s prospectus or summary prospectus, which can be obtained by visiting www.longviewresearchpartners.com, contains this and other information about the fund, and should be read carefully before investing.
Investing involves risk, including possible loss of principal.
Active Management Risk. The Fund is subject to management risk as an actively-managed investment portfolio. The Adviser’s investment approach may fail to produce the intended result.
Distributed by Quasar Distributors, LLC. Quasar is not related to Hill Investment Group Partners, LLC d/b/a Longview Research Partners, the fund’s Investment Adviser.
