Victory Capital Defends MarketAxess Stake Despite 47% Drop
Victory Capital’s RS Large Cap Value Strategy retained its stake in fixed-income trading platform MarketAxess as the stock lost nearly half its value over the past year due to competition and margin concerns.
MarketAxess Holdings closed at $112.27 on July 21, down 1.05% over the past month and marking a 47.06% decline over the past 52 weeks. Victory Capital’s RS Large Cap Value Strategy disclosed in its second-quarter investor letter that it maintained its position in the electronic bond trading platform despite this steep drawdown.
The stock, which has a market capitalization of $3.99 billion, traded as high as $214.98 over the past year before falling to near its 52-week low of $108.75. The firm attributed the second-quarter pressure to investor fears surrounding increased competition and margin compression in the electronic trading space.
Victory Capital remains bullish on the bond trading giant. "Shares were under pressure during the quarter over concerns of increased competition and margin pressure," the firm wrote. "Despite the recent underperformance and broader market concerns, we remain positive on the structural change opportunity taking place under the new CEO and continue to hold the position."
MarketAxess operates a critical infrastructure layer for fixed income, connecting over 2,100 institutional clients. It holds roughly 20% of the US corporate investment-grade bond trading market. For institutional investors, the company remains a dominant force in a traditionally opaque market, even as new challengers emerge to threaten its profitability.
The decision to hold reflects the value strategy’s broader approach during a turbulent macroeconomic period. The fund underperformed the Russell 1000 Value Index, which returned 13.9% in the second quarter, largely because it carried an underweight position in a red-hot information technology sector that surged 80.63%. Holding an out-of-favor financial infrastructure name aligns with the fund's mandate to identify companies with capable management and improving returns on invested capital.
The broader US equity market proved resilient in the second quarter of 2026 despite elevated inflation, labor market uncertainty, an ongoing Iran conflict and questions over Federal Reserve leadership. The S&P 500 rose 15% and the Russell 2000 Value climbed 17.2%, fueled by a broadening of artificial intelligence infrastructure investments. Against this backdrop, MarketAxess represents a contrarian wager that new leadership can reverse the stock's steep valuation discount.
