Rhumbline Advisers Quietly Re-Racks Its AI Winners in 2026-Q1

With no new positions in the top-50, conviction is expressed by where Rhumbline is willing to add on strength. Two moves stand out: Broadcom in semis and RTX in defense-industrials.

• Broadcom (AVGO) is the only true tech add among the giants, with shares up +0.6% and the position at 2.17% of the book, now worth about $2.54B. That is a clear bet that AI value will increasingly accrue to networking, custom accelerators, and connectivity — the tollbooths required to move Nvidia’s bits around — not just to the GPU vendor itself.

• RTX, at 0.36% of the portfolio and roughly $420.1M, saw shares up +1.3%. That’s a measured but deliberate nudge toward long-cycle defense and aerospace cash flows, a classic hedge against any future wobble in hyper-growth tech.

By contrast, there are no meaningful adds across banks, consumer, or staples in the top-50. The incremental risk budget is being funneled into the AI infrastructure stack and a single high-quality defense-industrial, consistent with a view that those two areas offer the best risk-adjusted compounding from here.

The biggest funding sources this quarter are exactly the names that built Rhumbline’s track record: ultra-profitable, richly valued mega-caps. The manager cut Apple by -2.7%, Microsoft by -2.5%, Nvidia by -1.0%, Alphabet’s two share classes by around -2.0%/-1.5%, Meta by -3.5%, and Amazon by -1.2%.

These are not thesis reversals; each position remains massive, with Nvidia still at 6.27% and Apple at 5.61% of the book, both carrying enormous gains versus average cost. The trims look like disciplined risk management after multi-hundred-percent run-ups, recycling a sliver of those winnings into slightly less-crowded AI infrastructure plays.

Outside tech, health-care bellwethers like Johnson & Johnson (-3.6%), Eli Lilly (-2.2%), Merck (-4.5%), AbbVie (-2.2%) and UnitedHealth (-3.2%) were also scaled back. Consumer defensives and beverages — Procter & Gamble, Coca-Cola, PepsiCo — all saw low-single-digit reductions, suggesting these ballast names are increasingly funding sources rather than active conviction bets at today’s valuations.

Sector weights barely budged on the surface, but the internals matter. Technology crept from 56.36% to 56.39% — effectively flat — yet within that, Rhumbline rotated from the flashiest AI exposures toward Broadcom and other infrastructure-centric semis while trimming high-flyers.

Consumer Discretionary edged up to 13.19% from 13.16%, still driven by Amazon, Walmart, Costco, Home Depot, Netflix and McDonald’s. But most of those were trimmed, implying the small sector lift is largely price action rather than fresh capital.

Health Care slipped from 6.95% to 6.88%, and Consumer Staples from 1.56% to 1.55%, as pharma and beverage giants were bled for cash. Finance (5.33%), Energy (3.09%), Telecom (2.20%), Real Estate (via Visa/Mastercard at 2.92%) and Basic Materials (0.67%) are essentially static, reinforcing that the only real rotation is inside technology and toward a slightly higher tilt to Industrials, which moved from 4.70% to 4.75% on the RTX add and a still-sizeable Tesla and Caterpillar.

Taken together, this is the playbook of a manager that believes the AI cycle is real and durable, but also understands how crowded the top of the trade has become. Rhumbline is content to let mega-cap AI and cloud remain the portfolio’s spine, while inching capital toward second-derivative winners like Broadcom and stable offsetting cash flows in defense-industrials.

The trims in pharma, beverages, and other defensives show a willingness to let traditional “safety” sectors shrink as a share of the pie. Instead of hiding there, the fund is using them as dry powder to refine its growth exposures, implicitly saying that secular tech and infrastructure remain the best long-term compounding engines despite near-term volatility risk.

Going forward, expect Rhumbline to keep tracking its benchmark-like profile at the sector level while making sharper calls inside those buckets. If AI leadership broadens into more infrastructure, tools, and industrial enablers, this quarter’s small but telling upgrades to Broadcom and RTX could be the opening move in a longer repositioning toward the under-owned plumbing behind the theme.