Q2 cleared an already-high bar, with near-record beats, strong guidance, and AI at the center of the earnings story. Importantly, strength broadened across sectors while valuations compressed.
The removal of forward guidance should add to volatility, but we expect the Fed to be flexible around incoming data. Heavy issuance and AI-driven demand for capital to keep pressure on the long end.
Semiconductors delivered exceptional returns alongside larger swings, while midterms and the Middle East added event risk. We remain constructive, but expect pullbacks along the way.
To obtain more information on the fund(s) including the Morningstar time period ratings and standardized average annual total returns as of the most recent calendar quarter and current month end, please click on the fund tile. Past performance is not indicative of future results. The Morningstar RatingTM for funds, or "star rating", is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure (excluding any applicable sales charges) that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods.
The average monthly portfolio asset class breakdown is constructed by the underlying holdings classification. Source: Morningstar, BlackRock, Aladdin. “Advisor models” data is as of 06/30/2026, based on the 958 “moderate” risk cohort models collected by BlackRock in the 3 months ending 06/30/2026. Advisor models collected by BlackRock are grouped into 5 risk cohorts for analysis, based on total equity allocation. Models in the “moderate” risk cohort are defined as any portfolio with an overall equity allocation of between 50-65%. BlackRock’s risk model data is supplemented by asset allocation and fund characteristic data from Morningstar. The portfolios analyzed represent a subset of the industry, and not its entirety. As such, there may be certain biases present in the data that reflect the advisors who choose to work with BlackRock to analyze their portfolios.
U.S. large-cap and emerging-market equity allocations have been predominantly index-based, while alternatives and flexible bond strategies leaned more active.
Advisor portfolios held more small and mid-cap stocks than BlackRock models and overweighted industrials, real estate, energy and utilities, while underweighting technology and communication services.
Only 39% of advisor models held alternatives, although those that do allocated an average of 8.7%, with portfolios favoring gold and commodities.
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A basis point (bps) is one hundredth of one percent (e.g. one basis point = 0.01%).
Actively managed funds do not seek to replicate the performance of a specified index, may have higher portfolio turnover, and may charge higher fees than index funds due to increased trading and research expenses.
There can be no assurance that performance will be enhanced or risk will be reduced for funds that seek to provide exposure to certain quantitative investment characteristics ("factors"). Exposure to such investment factors may detract from performance in some market environments, perhaps for extended periods. In such circumstances, a fund may seek to maintain exposure to the targeted investment factors and not adjust to target different factors, which could result in losses.
Fixed income risks include interest-rate and credit risk. Typically, when interest rates rise, there is a corresponding decline in bond values. Credit risk refers to the possibility that the bond issuer will not be able to make principal and interest payments.
This information should not be relied upon as research, investment advice, or a recommendation regarding any products, strategies, or any security in particular. This material is strictly for illustrative, educational, or informational purposes and is subject to change.
Actively managed funds do not seek to replicate the performance of a specified index, may have higher portfolio turnover, and may charge higher fees than index funds due to increased trading and research expenses.
There can be no assurance that performance will be enhanced or risk will be reduced for funds that seek to provide exposure to certain quantitative investment characteristics ("factors"). Exposure to such investment factors may detract from performance in some market environments, perhaps for extended periods. In such circumstances, a fund may seek to maintain exposure to the targeted investment factors and not adjust to target different factors, which could result in losses.
Fixed income risks include interest-rate and credit risk. Typically, when interest rates rise, there is a corresponding decline in bond values. Credit risk refers to the possibility that the bond issuer will not be able to make principal and interest payments.
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