3Q 2026 5Perspectives Large Growth Commentary
Explore the 3Q 2026 Polen 5Perspectives Large Growth commentary, including market views, portfolio positioning, and performance.
In the third quarter of 2026, the Polen 5Perspectives Large Growth Composite Portfolio (the “Portfolio”) returned -0.04% net of fees, compared with the 0.92% return of the Russell 1000 Growth Index (the “Index”). Markets opened the quarter with a sharp, mechanically driven selloff in AI-related equities, recovered swiftly into mid-August, and then turned more volatile after a hawkish pivot from the Federal Reserve and a 25 basis point rate hike in September. The team views the volatility largely as a “pause that refreshes” and has incrementally shifted the Portfolio’s positioning toward the “appliers” of AI.
How did the Polen 5Perspectives Large Growth strategy perform in 3Q 2026?
The Portfolio returned -0.04% net of fees in the third quarter of 2026, compared with the 0.92% return of the Index. The top contributors to relative performance were CrowdStrike, Cloudflare and Micron Technology (underweight). The most significant detractors from relative performance were Microsoft (underweight), Meta Platforms (underweight) and Tesla.
| Qtr | YTD | 1 Yr | 3 Yr | 5 Yr | 10 Yr | Since Inception (2-1-2010) | |
|---|---|---|---|---|---|---|---|
| Polen 5Perspectives Large Growth (Gross) | 0.07 | 11.65 | 12.27 | 37.85 | 17.33 | 20.03 | 18.53 |
| Polen 5Perspectives Large Growth (Net) | -0.04 | 11.17 | 11.60 | 36.94 | 16.53 | 19.19 | 17.84 |
| Russell 1000 Growth | 0.92 | 6.30 | 7.50 | 24.26 | 13.67 | 18.18 | 16.59 |
Performance shown represents results achieved at prior firms. The Polen 5Perspectives Large Growth strategy (the “Strategy”) began in February 2010 and was managed by Cupps Capital until October 2016 at which time it was transitioned to Advisory Research Investment Management. In March 2024, it transitioned to Bosun Asset Management, and subsequently in June 2025, it transitioned to Polen Capital. Andrew Cupps has served as the portfolio manager of the Strategy since inception. Mr. Cupps has been supported in his role as portfolio manager by various individuals, including Kevin Leitner and Chris Bush. Mr. Leitner and Mr. Bush have worked on the Strategy since inception. At all times during his tenure as portfolio manager, Mr. Cupps has had ultimate decision-making authority with respect to the Strategy. Mr. Cupps, Mr. Leitner and Mr. Bush joined Polen Capital on June 30, 2025. Returns are presented gross and net of management fees and include the reinvestment of all income. Historical net of fee performance was calculated using either actual management fees or highest fees. During certain periods of the track record, net of fee performance was calculated using actual management fees, while the highest fee was used during others. Beginning, October 31, 2016, net of fee performance is being calculated using highest fee. Prior period net of fee performance was calculated using actual management fees plus fund expenses (where applicable). After July 1, 2025, net of fee performance was calculated using either actual management fees or highest fees for fund structures. Current performance may be lower or higher. Periods over one-year are annualized. Past performance is not indicative of future results. Please reference the GIPS Report which accompanies the full commentary. The commentary is not intended as a guarantee of profitable outcomes. Any forward-looking statements are based on certain expectations and assumptions that are susceptible to changes in circumstances. Opinions and views expressed constitute the judgment of Polen Capital as of the date herein, may involve a number of assumptions and estimates which are not guaranteed, and are subject to change.
What happened in markets during the quarter?
Markets in the third quarter of 2026 opened with a sharp selloff in AI-related equities, rebounded into mid-August, and then turned volatile as attention pivoted toward inflation and monetary policy. In the team’s view, the quarter was a great example of markets pushing investors out of their comfort zones and challenging them to separate signal from noise.
The quarter opened with a meaningful air pocket in AI-related equities. A wave of hyperscaler earnings reports raised fresh questions about whether enormous AI-related capital expenditures would generate commensurate returns. Crowded positioning, elevated leverage and forced selling quickly compounded those concerns.
The result was one of the sharpest, most concentrated selloffs the AI trade had experienced since the current cycle began in 2023. Semiconductor and AI infrastructure-related stocks bore the brunt of the decline.
Sentiment began to stabilize as July came to a close and it became more apparent how much of the sell-off was mechanically driven. Continued evidence of robust hyperscaler spending plans, resilient enterprise demand and strong earnings results helped restore confidence in the AI investment cycle. The Russell 1000 Growth Index experienced a significant rebound into mid-August.
That strength proved short-lived as attention pivoted sharply toward inflation and monetary policy. Hawkish commentary from new Federal Reserve Chair Kevin Warsh raised the odds of a 25 basis point rate hike, which ultimately came in mid-September.
The team believes that, at worst, this kind of volatility can lead some investors to mistake signal for noise at the wrong times if they lack a robust process for navigating it. The team says it has worked very hard at this over the course of 26 years, continuously refining its approach. In its view, drawing on three disciplines—fundamental, thematic and technical—provides an opportunity, especially in moments when the signal becomes clouded by noise.
In the team’s view, the quarter’s volatility largely reflected a resetting of elevated positioning and expectations that had built during the first half of the year, rather than a broad deterioration in fundamentals across AI infrastructure and its adjacent themes. The team believes the underlying demand drivers across much of the ecosystem remain supportive.
What helped performance?
The top contributors to the Portfolio’s relative performance in 3Q 2026 were CrowdStrike, Cloudflare and Micron Technology (underweight).
CrowdStrike is a provider of cloud-native cybersecurity software. Its Falcon platform protects endpoints, cloud workloads, identity and data. Shares outperformed during the quarter after the company reported record net new annual recurring revenue (ARR) of $333 million, up 51% year-over-year, and raised its full-year net new ARR growth outlook by 630 basis points. The stock jumped by the most in more than two years on the report.
Cloudflare operates a global cloud network that provides security, performance and developer services, including its Workers platform and Zero Trust offerings. Shares outperformed after the company reported strong second quarter results, with accelerating revenue growth and record additions of paying customers, large customers and developers on its platform. Management also raised its full-year outlook.
The team was encouraged by management’s observation that machine-driven traffic now represents a majority of traffic across Cloudflare’s network. In the team’s view, this supports the idea that the shift toward AI agents and machine-to-machine activity may expand the company’s long-term opportunity.
Micron Technology is one of the world’s largest producers of DRAM and NAND memory, including the high-bandwidth memory used in AI accelerators. The Portfolio’s underweight position contributed to relative performance as shares underperformed amid a sharp sell-off in memory stocks. In July, a broader unwind in AI memory stocks pushed several leading memory companies significantly below their recent highs. This came despite record fiscal fourth-quarter revenue of $54.2 billion and guidance for further sequential growth.
What hurt performance?
The most significant detractors from the Portfolio’s relative performance in 3Q 2026 were Microsoft (underweight), Meta Platforms (underweight) and Tesla.
Microsoft is a global provider of cloud computing, productivity software and AI services, including Azure, Microsoft 365 and Copilot. The Portfolio’s underweight position detracted from relative performance as shares outperformed, gaining roughly 39% in the quarter. It was the stock’s best quarter since 1991, and shares recovered much of a first-half sell-off.
Fiscal fourth-quarter results sparked the rally. Azure and other cloud services revenue grew 43% year over year, Azure surpassed $100 billion in annual revenue for the first time, and Microsoft 365 Copilot crossed 30 million paid seats. Management also noted that customer demand continued to exceed available capacity, which eased concerns about the returns on AI spending.
Meta Platforms operates the Facebook, Instagram, WhatsApp and Messenger family of apps and is investing heavily in AI. The Portfolio’s underweight position detracted from relative performance as shares outperformed, including following the September 8 debut of Muse, Meta’s personal AI agent app. The launch provided an early example of how Meta is seeking to translate its AI investments into consumer-facing products, and it contributed to increased investor optimism around the company’s AI strategy.
Tesla designs and manufactures electric vehicles and energy storage systems, and is building out a portfolio of autonomous driving, robotaxi and humanoid robotics businesses. Shares underperformed following second quarter results, when record revenue was overshadowed by margin pressure and a sharp step-up in capital spending to fund the company’s AI and robotics ambitions. Tesla continued to report tangible progress on Robotaxi and Cybercab, while demand for its core vehicles and energy storage products generally remained healthy during the period.
How did the team change the Portfolio?
In 3Q 2026, the team increased the Portfolio’s exposure to Technology and decreased its exposure to Industrials. The reduced exposure to Industrials came as the team pared back exposures within the Electrification and AI infrastructure-related themes.
The team still sees a meaningful opportunity for these picks and shovels “suppliers” to the AI build out. However, it has increasingly used these positions as a source of funds to add to a mix of Semis and Software-related businesses within Technology.
As a result of these shifts, Technology remains the Portfolio’s largest sector exposure, followed by Consumer Discretionary and Communication Services in roughly equal measure.
What is the team’s outlook?
The team sees the volatility of 3Q 2026 as consistent with what it has come to think of as “the pause that refreshes.” In its view, the volatility largely reflected a resetting of elevated expectations and related positioning that had built during the first half of the year, rather than a broad deterioration in fundamentals across AI infrastructure and its adjacent themes. The team believes the underlying demand drivers across much of the ecosystem remain supportive.
The team says its primary objective has always been optimizing around performance. Given the conditions present today, it seeks to best position the Portfolio to pursue attractive long-term performance.
The team believes it is in the early stages of seeing a transition from the “suppliers” of AI—providing infrastructure and components—to the “appliers,” the businesses leveraging AI to make their core businesses more productive and introduce new products and services. The team still sees meaningful opportunities for the suppliers in the quarters and years ahead amid this AI capital expenditure cycle. However, it believes the thematic timeliness, a distinct element of its process, has changed since Spring of this year.
As a result, the team has incrementally shifted the Portfolio’s positioning toward the “appliers,” a powerful theme it believes has a more meaningful growth runway.
Taking a step back, the team believes the US is home to some of the most innovative, dynamic growth companies in the world. The team has found that its performance is fueled by the accelerating pace of change, and that orienting around this has provided opportunities largely irrespective of the prevailing market environment. It has sought to build a process that harnesses change and disruption to its advantage. The team says this has only become more important amid the paradigm shift it has experienced with AI in recent years, and it expects that to continue into the future.
Who manages the Polen 5Perspectives Large Growth strategy?
The Polen 5Perspectives Large Growth strategy is managed by Drew Cupps, Head of Team, Portfolio Manager & Analyst, who has 34 years of industry experience.
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Contribution to relative return: a measure of a security’s contribution to the relative return of a portfolio versus its benchmark index. The calculation can be approximated by the below formula, taking into account purchases and sales of the security over the measurement period. Please note this calculation does not take into account transactional costs and dividends of the benchmark, as it does for the portfolio. Contribution to relative return of Stock A = (Stock A portfolio weight (%) - Stock A benchmark weight (%)) x (Stock A return (%) – Aggregate benchmark return (%)).
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