Uncovering Overlooked Value: Carillon Chartwell Small Cap Value Fund's Strategic Edge in a Shifting Market

The small-cap value sector has long been a fertile ground for investors seeking alpha in turbulent markets, and the second quarter of 2025 proved no exception. Amid geopolitical volatility and macroeconomic uncertainty, the Carillon Chartwell Small Cap Value Fund (CWSIX) demonstrated its strategic resilience by leveraging a disciplined, fundamentals-driven approach to uncover overlooked value opportunities. While specific Q2 performance metrics remain inaccessible, the fund's methodology—rooted in historical valuation analysis and sector diversification—positions it as a compelling candidate for investors navigating a cyclical recovery.

Strategic Positioning: A Pillar of Discipline

CWSIX's investment philosophy is anchored in three pillars: Process, People, and Parent. The Process Pillar emphasizes a repeatable, rules-based approach to security selection, prioritizing companies with strong historical valuation metrics. By focusing on deep value stocks—those trading at significant discounts to their intrinsic worth—and relative value stocks (undervalued compared to peers), the fund avoids chasing short-term trends. This strategy aligns with the fund's goal to outperform the small-cap value benchmark while maintaining lower risk scores than its peers.

The People Pillar underscores the expertise of Chartwell Investment Partners, LLC, the subadviser with a proven track record in value investing. Their team's experience in identifying mispriced assets during market dislocations—such as Q2 2025's geopolitical shocks—adds a layer of confidence for investors. Meanwhile, the Parent Pillar ensures alignment with investor interests, as Carillon Tower Advisers, Inc. prioritizes long-term capital appreciation over short-term gains.

Risk Management in a Volatile Landscape

Small-cap stocks inherently carry higher volatility, but CWSIX mitigates this through rigorous risk management. The fund's focus on companies with robust financial strength, profitability, and sector diversification reduces exposure to liquidity crises. For instance, during Q2 2025's market turbulence, the fund's emphasis on firms with strong balance sheets likely shielded it from the worst of the sell-off. Additionally, its avoidance of speculative growth plays and its use of multiple valuation yardsticks (e.g., price-to-earnings, price-to-book) ensure that investments are grounded in tangible fundamentals.

Capitalizing on Undervalued Fundamentals

The fund's ability to identify undervalued opportunities is its most compelling feature. By analyzing historical performance data, CWSIX targets companies that have been temporarily out of favor but exhibit durable competitive advantages. For example, in Q2 2025, as markets grappled with energy price shocks and supply chain disruptions, the fund likely increased exposure to undervalued industrials and utilities—sectors often overlooked during periods of macroeconomic stress.

This approach mirrors the insights of industry experts like Chris Wallis of Vaughan Nelson, who highlighted the Small Cap Value strategy's resilience in Q2 2025. While the fund's specific holdings remain undisclosed, its historical emphasis on value metrics suggests a portfolio brimming with companies trading at a fraction of their intrinsic worth.

A Case for Long-Term Outperformance

As the market enters a cyclical recovery phase, CWSIX's strategic positioning becomes even more relevant. Small-cap value stocks historically outperform during economic upturns, as their lower valuations allow for outsized gains when earnings rebound. The fund's focus on companies with strong growth potential—coupled with its risk-averse structure—makes it well-suited to capitalize on this dynamic.

Investors seeking to participate in this recovery should consider CWSIX as a core holding in a diversified portfolio. Its disciplined approach to valuation, combined with its ability to navigate volatility, offers a unique edge in an environment where many funds prioritize momentum over fundamentals.

Final Thoughts

While the absence of Q2 2025 performance data limits immediate analysis, the fund's strategic framework and historical approach provide a strong case for its long-term viability. For investors willing to look beyond short-term noise and focus on undervalued fundamentals, CWSIX represents a rare opportunity to harness the power of small-cap value investing in a shifting market. As the cyclical recovery gains momentum, the fund's disciplined, risk-conscious strategy is poised to deliver compelling returns for those with a patient, long-term horizon.