The Shifting Sands of Q3 2025: Navigating Value in a Volatile Market

Well, another quarter has certainly flown by, hasn't it? As we look back at the third quarter of 2025, it’s clear that the investment landscape—always a bit of a rollercoaster, let’s be honest—offered up its usual blend of challenges and, for those of us patient enough, some rather compelling opportunities. The Voya Balanced Large Cap Core Value SMA, for Merrill clients, continued its diligent work, aiming to unearth those overlooked gems in a market that sometimes seems fixated on flash over substance.

You see, the market this past quarter, much like the one before it, truly kept us on our toes. There were moments of genuine optimism, often spurred by whispers of moderating inflation or a hopeful turn in central bank policy. But then, almost inevitably, a fresh wave of concerns would ripple through—geopolitical tensions, supply chain quirks, or just that nagging feeling that perhaps, just perhaps, the economy isn’t quite as robust as some might wish. This kind of environment, for value investors, can feel a bit like wading through thick mud; progress is made, but it takes effort, conviction, and a good deal of looking beyond the immediate headlines.

Our strategy, however, remains steadfast: focus on quality businesses with solid fundamentals that, for whatever reason, are trading below their intrinsic value. And for Q3, this disciplined approach yielded some interesting results. We saw particular strength in a few of our financial holdings, companies that, in truth, have been a bit out of favor but possess robust balance sheets and attractive dividends. It’s funny, isn’t it, how the market often overlooks stability in its chase for growth?

Conversely, not every bet paid off instantly, and that’s just the nature of the beast, isn’t it? A couple of our industrial names, while fundamentally sound, faced some headwinds due to lingering global demand uncertainties. These aren't necessarily long-term concerns, mind you, but they do remind us that even the best-laid plans can encounter short-term turbulence. And sometimes, you just have to ride those out, trusting in the underlying strength of the asset.

Looking ahead, as we push into the final stretch of 2025 and indeed glance towards 2026, the picture remains nuanced. Interest rate paths, corporate earnings trajectories, and the ever-present specter of global events will undoubtedly continue to shape returns. But our conviction in the enduring power of value investing—identifying those businesses that are priced below what they’re truly worth—only deepens. We believe that sticking to our knitting, emphasizing fundamental research and a long-term perspective, remains the most prudent course. Because, after all, true value has a way of revealing itself, given enough time.