3Q 2026 5Perspectives Growth Opportunities Commentary

The Polen 5Perspectives Growth Opportunities Composite Portfolio (the “Portfolio”) returned -6.2% net of fees in the third quarter of 2026, compared to the 0.5% return of the Russell 3000 Growth Index (the “Index”). The quarter was marked by sharp volatility in AI-related equities, as concerns surrounding capital expenditure, crowded positioning and monetary policy weighed on growth stocks.

We view this volatility largely as a “pause that refreshes,” resetting elevated positioning and expectations rather than signalling a broad deterioration in the fundamentals of AI infrastructure and its adjacent themes. At the same time, we believe we are in the early stages of a transition from the infrastructure “suppliers” of AI to the businesses applying AI to improve productivity and drive innovation.

What Characterized U.S. Growth Markets in Q3 2026?

The quarter opened with a meaningful sell-off in AI-related equities, as hyperscaler earnings reports raised fresh questions about whether enormous AI-related capital expenditures would generate commensurate returns. Crowded positioning, elevated leverage and forced selling compounded these concerns, with semiconductor and AI infrastructure-related stocks bearing the brunt of the decline.

Sentiment began to stabilise toward the end of July, as continued evidence of robust hyperscaler spending plans, resilient enterprise demand and strong earnings results helped restore confidence in the AI investment cycle. The Russell 3000 Growth Index experienced a significant rebound into mid-August.

That strength proved short-lived as attention pivoted toward inflation and monetary policy. Hawkish commentary from the Federal Reserve and a September rate hike introduced renewed volatility. In our view, the quarter's market movements largely reflected a resetting of elevated expectations rather than a broad deterioration in underlying fundamentals.

Which Holdings Had the Largest Impact on the Portfolio's Relative Performance?

The top contributors to the Portfolio's relative performance were Twist Bioscience, CrowdStrike and Micron Technology (underweight).

Twist Bioscience outperformed following another quarter of record revenue and accelerating growth, driven in part by increasing adoption of the company's platform for AI-enabled drug discovery. Management raised full-year guidance, reinforcing confidence in its growth trajectory as it approaches profitability. CrowdStrike outperformed after reporting record net new annual recurring revenue (ARR) of $333 million, up 51% year-over-year, and raising its full-year net new ARR growth outlook by 630 basis points. Micron Technology, one of the world's largest memory producers, contributed to relative performance through the Portfolio's underweight position as shares underperformed amid a sharp sell-off in AI-related memory stocks.

The most significant detractors were Argan, Microsoft (underweight) and Bloom Energy.

Argan underperformed despite record fiscal second-quarter results, as investors focused on a decline in backlog from $2.9 billion to $2.5 billion and Industrial segment margins that fell short of expectations. Microsoft, which was underweight in the Portfolio, detracted from relative performance as shares rallied following stronger-than-expected results in its Azure cloud business, easing concerns about returns on AI investment. Bloom Energy experienced significant volatility amid valuation concerns, the timing of second-half revenue conversion and a short-seller report questioning aspects of the company's operations. Shares subsequently recovered much of their decline following record second-quarter results and increased full-year guidance.

How Is the Portfolio's Sector Exposure Shifting?

One of the most notable changes during the quarter was our increased exposure to Technology and decreased exposure to Industrials. The reduced exposure to Industrials came as we pared back positions within the Electrification and AI infrastructure-related themes. While we continue to see meaningful opportunities among these “suppliers” to the AI buildout, we have increasingly used these positions as a source of funds to add to semiconductor and software-related businesses within Technology. This reflects our evolving view of the AI investment cycle, as opportunities begin to extend beyond infrastructure providers toward businesses leveraging AI to improve productivity and introduce new products and services.

As a result, Technology remains our largest sector exposure, followed by Industrials and Consumer Discretionary in roughly equal measure.

What Is Our Outlook?

We believe the quarter's volatility largely reflected a resetting of elevated expectations and positioning rather than a broad deterioration in fundamentals across AI infrastructure and its adjacent themes.

We believe we are in the early stages of a transition from the “suppliers” of AI to the “appliers”, businesses leveraging AI to make their core operations more productive and introduce new products and services. While meaningful opportunities remain across AI infrastructure, we believe the thematic timeliness has changed, leading us to incrementally shift positioning toward the “appliers.”

We continue to believe the U.S. is home to some of the world's most innovative and dynamic growth companies. Our process seeks to harness the accelerating pace of change and disruption to identify attractive long-term investment opportunities.

Past performance does not guarantee future results. The commentary is not intended as a guarantee of profitable outcomes. Please see Important Disclosures in the full commentary.