Summary

• The Virtus Ceredex Small-Cap Value Equity Fund gained +5.49% (Class I) for the quarter, compared to the Russell 2000® Value Index's return of +4.96%.
• Advanced Energy Industries outperformed, driven by strong demand for power conversion solutions supporting AI-driven data center buildouts and broader investment in electric grid infrastructure.
• Ceredex Value Advisors initiated a position in Jack Henry, a provider of back-office software solutions for banks, as it is positioned to benefit from continued demand for core banking technology infrastructure.
• Ceredex Value Advisors sold department store retailer Macy's and apparel company VF Corporation, reflecting a more cautious consumer outlook amid growing pressures on discretionary income.
• Portfolio managers maintain a modestly positive economic outlook, focusing on identifying areas where expectations remain underappreciated, particularly as new bottlenecks emerge across the value chain.

Market Review

Small-cap value stocks experienced a strong start to the first quarter, continuing to benefit from a broadening of market leadership beyond mega-cap technology and AI-driven names. Investors rotated into more attractively valued cyclical sectors, where