Voya Corporate Leaders® 100 Fund Quarterly Commentary - 1Q25
A rules-based strategy designed to exploit market inefficiencies in a disciplined systematic manner.
Market review
In the first quarter of 2025, U.S. equities faced a significant downturn, with the S&P 500 Index falling by –4.27% and the Nasdaq Composite Index declining by –10.42%. This marked the worst performance for the S&P 500 since 3Q22 and for the Nasdaq since 2Q22. The market’s decline was driven by a combination of economic growth fears, tariff uncertainties and emerging cracks in the artificial intelligence sector. Big technology, represented by the Magnificent Seven stocks, fell into bear-market territory, down 16% for the quarter. Despite these challenges, several key economic indicators remained strong.
Notably, sector performance was mixed, with defensive sectors like energy and healthcare outperforming the broader market. These sectors benefited from their historical resilience in uncertain economic conditions, providing a buffer against the market’s overall volatility. In contrast, the cyclical and technology sectors lagged, reflecting investor concerns over economic growth and the impact of tariff uncertainties. The market’s negative sentiment was further worsened by weaker economic data and earnings changes. However, the economy received some support from the Federal Open Market Committee as Chair Powell emphasized that tariffs would only affect inflation temporarily.
Portfolio review
Over the reporting period, stock selection in information technology, communication services and consumer discretionary sectors contributed the most to performance. Selection and the overweight to the health care sector also contributed. On an individual stock level an underweight in NVIDIA Corp., an overweight in CVS Health Corp. and an underweight in Apple Inc. contributed to performance this quarter.
By contrast, stock selection in the financials sector and to a less extent the materials sector detracted the most. Among the largest individual detractors for the period were an overweight position in PayPal Holdings, Inc., an underweight position in Berkshire Hathaway Inc. and an overweight to Target Corp.
As of the end of the reporting period, the SMA’s largest sector overweight was to the consumer staples sector, while the largest sector underweight was information technology. Sector exposures are purely a function of the strategy’s rules-based investment discipline and are not actively managed.
Outlook
The outlook for U.S. equities in the coming period remains cautious amid a mix of economic and market factors. While the labor market remains strong and inflation pressures have eased, broader economic uncertainty and tariff uncertainties continue to pose significant risks. Policymakers will need to handle these challenges carefully to make sure the economy keeps growing and staying stable.
Key Takeaways
For the quarter ended March 31, 2025, the Voya Corporate Leaders 100 SMA outperformed its benchmark the S&P 500 Index (the Index) on both gross- and net-of-fees basis.
During the quarter, the SMA continued to follow its strict rules-based investment approach.
At the beginning of the quarter, the SMA held equal-weighted positions in the stocks of the S&P 100 Index (implying that each holding represented about 1% of the portfolio).
Over the course of the quarter, if the value of a security increased by more than 50%,* the position size was reduced to 1%, and if the value of a security decreased by more than 30%,* the position was eliminated.