Conestoga Mid Cap Composite Q2 2025 Commentary

2025-07-23 12:40:00 ET

Performance & Attribution

The Conestoga Mid Cap Composite rose 3.64% net-of-fees in the second quarter, trailing the Russell Mid Cap Growth Index return of 18.20%. Following the first quarter of 2025 where the Composite soundly outperformed its benchmark thanks to its emphasis on higher-quality, conservative growth companies, investor enthusiasm flipped following April 8th's "Liberation Day" announcements and rushed back into the highest beta and artificial intelligence-driven stocks, together forming a historically narrow set of leadership stocks and a significant headwind for the Composite throughout the rest of the second quarter. To highlight, stocks with a beta greater than 2.3 – a market segment which our Composite has zero exposure to – represented more than 50% of the Russell Midcap Growth Index's total returns in the quarter. Stock selection was particularly troublesome in Technology, Consumer Discretionary, Industrials, and Utilities, while our lack of representation in Energy, Consumer Staples, and Basic Materials provided some positive offsets to our returns....

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