AMG River Road Small-Mid Cap Value Fund — Q3 2025 Commentary and Outlook

During Q3 2025, the AMG River Road Small-Mid Cap Value Fund navigated a mixed market environment as investors weighed persistent inflationary signals alongside signs of moderating economic growth. Small- and mid-cap value stocks experienced uneven performance, with sector rotations and idiosyncratic company developments driving much of the relative dispersion within the portfolio.

The fund’s managers remained committed to a valuation-focused, bottom-up approach. Portfolio positioning continued to favor financially resilient businesses trading below intrinsic value, with emphasis on durable cash flows, conservative balance sheets and pricing power. Over the quarter, allocation tilt towards industrials, financial services and select consumer staples reflected the team’s view that these areas offer favorable risk-reward given current valuations and secular tailwinds.

Contributors to performance included several holdings that reported earnings above expectations or delivered margin improvements, validating the team’s emphasis on operational quality. Detractors were largely concentrated in cyclical segments exposed to near-term demand swings and in a handful of positions where company-specific challenges temporarily pressured share prices. The managers used such weakness to reassess fundamentals and, when appropriate, add to high-conviction positions at attractive entry points.

Risk management remained integral to portfolio construction. Position sizes were calibrated to reflect conviction and liquidity, while ongoing stress testing sought to measure sensitivity to interest-rate trajectories and growth shifts. The team also maintained modest cash reserves to capitalize on dislocations and selective opportunities that arise amid market volatility.

Looking ahead, the commentary underscores a selective, value-driven stance. The managers expect continued dispersion between winners and losers as macro signals evolve, reinforcing the importance of rigorous fundamental research and patience. For investors, the fund aims to deliver long-term, value-oriented exposure to small- and mid-cap companies with the objective of compounding capital over full market cycles.

As always, performance may vary period to period and investors should review the fund’s fact sheet and prospectus for complete holdings, fees and risk considerations. The management team will continue monitoring macro developments and company fundamentals to adjust allocations where warranted.