2Q 2026 5Perspectives Large Growth Commentary

The Polen 5Perspectives Large Growth Composite Portfolio (the "Portfolio") returned 26.63% (net of fees) in the second quarter of 2026, compared to the 16.74% return of the Russell 1000 Growth Index (the "Index"). The quarter was defined by a sharp recovery in large-cap growth equities as investors again rewarded companies tied most directly to AI infrastructure, semiconductors, and the supporting power and networking buildout, though the path remained volatile as rate expectations and geopolitical developments shifted along the way.

Even with the Index's strong advance, stock-level dispersion remained high, which continued to reward portfolios concentrated in the parts of large-cap growth where AI-related earnings leverage and market recognition were most visible.

What Drove Large-Cap Growth Markets in Q2 2026?

As in many recent periods, leadership was concentrated in businesses with direct or perceived exposure to AI-related capital spending, including semiconductors, compute infrastructure, networking, and power. Investors continued to reward companies with tangible participation in the buildout of AI capacity, while more defensive or less directly connected segments of the market generally lagged. At the same time, markets continued to recalibrate around inflation data and the expected path of policy rates, while the rise in oil prices late in the period amid tensions in the Middle East added another source of uncertainty. In our view, the dominant feature of the period was the market's continued preference for businesses tied to the AI ecosystem and the earnings power associated with that spending cycle.

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

The top contributors to the Portfolio's relative performance were Advanced Micro Devices, Intel, and Nebius Group.

Advanced Micro Devices contributed meaningfully as investor appetite for AI infrastructure remained strong. The company continued to benefit from enthusiasm around its role in data center central processing units (CPUs) and accelerators, while broader semiconductor leadership remained supported by expectations for sustained AI-related capital spending.

Intel was also a significant contributor. Shares advanced sharply as investors became more constructive on the company's exposure to AI-related infrastructure demand and on the potential for improving execution within its product and foundry efforts.

Nebius Group, a leading neocloud provider, was another notable contributor. The company is viewed by the market as a way to participate in expanding AI-related infrastructure and compute demand, and shares benefited as investors broadened their search for businesses tied to AI workloads beyond the largest platform companies.

The most significant detractors from the Portfolio's relative performance were Palantir Technologies, Lam Research (not owned), and Cameco.

Palantir Technologies detracted despite remaining one of the market's more visible AI software businesses. In our view, the pullback reflected how demanding expectations had become after a strong earlier run, as valuation sensitivity increased and investors became more selective among prior AI winners.

Lam Research detracted because the Portfolio did not own the company during a period when semiconductor capital equipment shares advanced sharply. Cameco was also a notable detractor, as shares were weak while capital gravitated more toward companies with direct near-term exposure to AI infrastructure spending and less toward parts of the energy complex tied to longer-duration power themes.

How Is the Portfolio's Sector Exposure Shifting?

The Portfolio continued to have its largest absolute exposure to the Technology sector, and that exposure grew over the course of the quarter. Much of this increase came from additions to our semiconductor holdings given the process' emphasis on thematic timeliness and accelerating earnings growth. We funded these additions by reducing our exposure to Materials, Financials, and Consumer Discretionary. The Russell reconstitution at quarter-end further reshaped the Index, with semiconductors now accounting for more than one-third of Index weight and Amazon's reclassification reducing the Consumer Discretionary weighting.

What Is Our Outlook for Large-Cap Growth?

We believe the large-cap growth universe in the US is home to some of the most innovative and dynamic companies and entrepreneurs in the world. The accelerating pace of change continues to create opportunity, but it also increases disruption risk when leadership shifts. AI is compressing the time it takes for winners and losers to separate, which is why our process seeks to blend competitive-advantage work with thematic and technical disciplines that we believe helps us navigate the dynamic landscape.

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.