3Q2025 - Focus Growth Commentary
Amid ongoing market momentum fueled by AI enthusiasm and semiconductor sector strength, the Portfolio maintained key exposures in technology and innovation.
Amid ongoing market momentum fueled by AI enthusiasm and semiconductor sector strength, the Portfolio maintained key exposures in technology and innovation through holdings such as Oracle, Shopify, and Alphabet. New positions in Broadcom and Boston Scientific reflect our ongoing research and commitment to identifying durable long-term growth trends. While our quality-driven approach faced headwinds in a “risk-on” environment dominated by high-beta stocks, the Focus Growth Composite Portfolio remains concentrated in high-quality businesses that we believe are well-positioned to deliver consistent, attractive long-term earnings growth across cycles.
- Equity markets continued their strong momentum in Q3 2025, driven by enthusiasm for generative AI and strength in the semiconductor sector. Investors largely looked past high tariffs, persistent inflation, and a softening labor market, instead focusing on positive economic surprises, fiscal policy optimism, and better-than-expected corporate earnings.
- Performance leadership once again concentrated in AI-driven sectors, particularly semiconductors, with “risk-on” market sentiment favoring high-beta growth stocks and leaving traditionally defensive sectors like healthcare, consumer staples, and real estate lagging. The market distinctly bifurcated companies into “AI winners or losers,” contributing to exacerbated performance dispersion.
- Top relative contributors to performance included Oracle, Shopify, and Meta (not owned). The top absolute contributors were Oracle, Shopify, and Alphabet. The largest relative detractors were Apple (not owned), NVIDIA (underweight), and Tesla (not owned), while Accenture, ServiceNow, and Adobe were the largest absolute detractors.
- We initiated new positions in NVIDIA, Broadcom, and Boston Scientific, while exiting positions in Gartner and Thermo Fisher Scientific. We trimmed positions in Netflix, Alphabet, and Visa.
- Despite the current headwinds to our quality-driven approach amid a concentrated “risk-on” environment, we maintain conviction that our emphasis on durable, high-quality businesses positions the Portfolio for mid-teens or better long-term earnings growth and resilience across market cycles.