4Q2025 - U.S. Small Cap Growth Commentary
While the prospect of declining interest rates and improving earnings growth has driven more attention to the small cap asset class broadly, we remain most excited about structural tailwinds, including the accelerating pace of innovation and the disruption and opportunity it presents for disciplined investors.
- During the fourth quarter of 2025, the Polen 5Perspectives Small Growth Composite Portfolio returned -1.3% gross and -1.5% net of fees, respectively, compared to the 1.2% return of the Russell 2000 Growth Index.
- The top contributors to relative performance in the period were Bloom Energy, GeneDx, and Argan.
- The most significant detractors from the Portfolio’s relative performance in the quarter were Stride, Corcept Therapeutics, and Ramaco Resources.
- After consecutive double digit returns in 2Q and 3Q, small caps – as defined by the Russell 2000 Growth Index – ended the year with a more modest 1.2% return in 4Q.
- Within the small cap asset class, performance continued to broaden out beyond the AI theme, and Biotech in particular was a standout performer this quarter.