# Diamond Hill Select Strategy Posts Mixed Q1 2026 Returns Amid Market Volatility
Diamond Hill Select Strategy delivered 1.23% returns in the first quarter of 2026, underperforming the S&P 500's 2.84% gain during the same period. The actively managed portfolio's lag reflects both sector positioning challenges and individual stock selection headwinds that persisted through the opening months of the year.
The strategy's underperformance stems partly from its defensive positioning in a quarter that rewarded growth and technology exposure. Large-cap technology stocks surged early in Q1 2026, gaining momentum from artificial intelligence enthusiasm and positive earnings revisions. Diamond Hill's more value-oriented stance and quality-focused holdings left it on the sidelines during this rally.
Within the fund's portfolio, selective holdings in financials and industrials provided some support, though these gains proved insufficient to offset weakness in its healthcare and consumer discretionary positions. The strategy maintained its discipline around valuation metrics and earnings quality, avoiding the speculative froth that emerged in certain market pockets during the quarter.
Year-to-date performance through Q1 stands at 1.23%, placing the strategy below major indices but within expected ranges for a conservative, fundamentally-driven approach. Diamond Hill's investment team has historically prioritized downside protection and long-term compounding over short-term benchmark chasing, a philosophy tested during periods of broad equity strength.
Looking forward, portfolio managers note that valuation spreads between quality and speculative names remain wide. This setup could benefit the strategy in coming quarters should market sentiment shift toward earnings substance over growth momentum. The fund maintains a disciplined buy-and-hold approach, with no significant portfolio turnover during Q1.
Investors should weigh this quarter's relative weakness against the strategy's historical track record during market corrections and bear markets, where its defensive characteristics