In the second quarter of 2026, global small and mid-cap equities demonstrated robust growth, largely fueled by excitement surrounding artificial intelligence. Geopolitical volatility between the U.S. and Iran initially caused market unease, but a subsequent ceasefire improved investor confidence. During this period, the MSCI All Country World Index recorded a substantial gain of 14.93%. Wasatch Global Investors' "Select Strategy" also saw positive returns, though it slightly underperformed the index, primarily due to stock choices within the U.S. information technology and financial sectors. The firm remains committed to investing in high-quality, long-term growth opportunities, particularly those benefiting from AI advancements, while also acknowledging the potential of non-AI related investments. Wasatch believes that strong fundamentals will eventually re-engage investor interest, positioning their holdings for sustained outperformance.

A specific challenge highlighted in Wasatch Global Select Strategy's Q2 2026 letter was the performance of Hamilton Lane Incorporated (NASDAQ: HLNE). The private equity and venture capital firm's stock negatively affected the strategy's overall returns. As of July 28, 2026, Hamilton Lane's shares closed at $89.52, valuing the company at $4.97 billion. While the stock saw a 13.81% increase over the past month, it experienced a significant 42.43% decline over the preceding 52 weeks. Wasatch attributed this downturn to investor apprehension regarding Hamilton Lane's exposure to private credit. Despite these concerns, Wasatch chose to retain its position, based on the conviction that the fundamental strength of Hamilton Lane's business would prevent the severe disruption anticipated by some investors.

This situation underscores the intricate dynamics of investment management, where market sentiment can swiftly influence stock performance, even for fundamentally sound companies. The long-term perspective adopted by Wasatch Global Investors reflects a belief in resilience and intrinsic value over short-term market fluctuations. It highlights the importance of thorough analysis and strategic conviction in navigating complex financial landscapes, particularly when facing sector-specific anxieties. Embracing a forward-looking approach and focusing on core business strengths allows investors to look beyond immediate challenges towards sustained prosperity.