BlackRock Value Fund Lost 3.5% in Q1, IT Picks Helped

BlackRock's Large Cap Focus Value Fund returned -3.49% for its institutional shares and -3.56% for Investor A shares (without sales charge) in the first quarter of 2026, the firm said in a commentary. Stock selection in the information-technology sector provided the biggest boost to relative performance. The standout area was technology hardware, storage and peripherals. The largest drag came from security selection in the industrials sector, specifically professional-services firms.

Fund managers shifted sector weights during the quarter. They increased allocations to financials and IT while trimming consumer discretionary and materials. The moves reflected a tilt toward asset-heavy businesses with less exposure to AI-driven obsolescence, BlackRock said. Value stocks outperformed growth stocks over the period as earnings trends converged and investors gravitated toward companies with tangible assets and real cash flows.

The fund's top contributors included positions in banks and insurers that benefited from higher rates and steady loan growth, according to the commentary. On the technology side, picks in hardware and storage–companies tied to enterprise spending and data-center buildout–outperformed the broader software and internet names that had driven earlier cycles.

The industrial detractor list featured professional-services firms whose margins came under pressure as corporate clients slowed discretionary consulting and outsourcing spending. Managers said they reduced some of those positions during the quarter.

For value-focused investors, the report offers a case study in how sector and industry assignments drive returns beyond the value-versus-growth label. The fund's underweight to consumer discretionary and materials kept it out of some of the worst drawdowns in retail and commodity-linked stocks. At the same time, the overweight to financials captured a tailwind from rising net-interest margins and buyback activity.

BlackRock did not provide forward guidance or explicit portfolio turnover figures in the commentary. The allocation changes suggest the team sees more opportunity in traditional value sectors–financials, energy, parts of industrials–than in cyclicals tied to consumer sentiment. The value premium's return in the first quarter came after a long stretch where growth and momentum dominated. Whether the rotation has legs depends on whether earnings for value sectors can sustain their relative advantage. The fund's managers are betting that the convergence in earnings trajectories is not a one-quarter fluke.