| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 11.0% | 4.9% | 16.5% |
| 2025 | 2024 | 2023 | 2022 | 2021 | 2020 |
|---|---|---|---|---|---|
| 16.5% | 22.6% | 17.0% | -31.3% | 15.6% | 50.1% |
The Invesco Discovery Fund delivered strong Q4 2025 performance, returning 4.94% versus 1.22% for the Russell 2000 Growth Index, driven primarily by stock selection in information technology and industrials. The fund maintains a constructive outlook supported by a resilient economy, strong corporate profits, and Federal Reserve rate cuts. Key return drivers include exposure to AI infrastructure through companies like Lumentum, which supplies lasers to hyperscale data centers, and semiconductor leaders like Tower Semiconductor reporting accelerated growth timelines. The portfolio emphasizes premier growth compounders benefiting from technology-driven disruption across the global economy. Major overweights in industrials and IT sectors reflect the team's focus on industrial renewal and AI innovation themes. Looking ahead, catalysts include expected GDP and corporate profit growth in 2026, record stock buybacks, strengthening M&A activity, and anticipated IPO waves. The fund added positions in high-growth retailers and development operations platforms while trimming underperforming alternative asset managers and education technology companies facing platform rollout challenges.
The fund focuses on premier growth compounders that benefit from technology-driven innovation disrupting large portions of the global economy, with particular emphasis on AI infrastructure, semiconductor innovation, and industrial renewal opportunities.
The Invesco US Growth Team maintains a constructive outlook for US equities supported by a resilient economy, strong corporate profits, reduced regulatory burdens and US Federal Reserve rate cuts. The team continues to focus on bringing the potential of premier growth companies to fund shareholders with emphasis on industrial, financial and IT sectors.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Mar 12 2025 | 2024 Q4 | ALAB, ALTR, CLS, CVLT, GWRE, INTA, NOVA, PEGA, PI, QTWO, WING | - | - | - |
| Apr 30 2025 | 2025 Q1 | 1ITCI IM, ALAB, BBIO, COOP, EMBR3 BZ, EVR, FRPT, LITE, PSN, RKLB, WAY | - | - | - |
| Jul 18 2025 | 2025 Q2 | AAON, CLS CN, CRS, CWAN, DUOL, ESE, EXLS, FLS, FN, INSP, SG | AI investment, earnings, growth, industrial renewal, stock selection | - | The letter underscores confidence in US growth driven by AI investment, industrial renewal, and improving earnings visibility. Management emphasizes stock selection within industrials and technology… |
| Oct 20 2025 | 2025 Q3 | AEIS, CLS, LSCC, PAR, PRIM, QTWO, STRL, TTMI, TXRH | Artificial Intelligence, Growth Investing, industrials, infrastructure, semiconductors | - | The fund focuses on industrial renewal and AI-driven innovation as key growth themes, with positions in semiconductor capital equipment and electronic manufacturing. Companies like Lattice… |
| Jan 24 2026 | 2025 Q4 | AVAV, BTSG, CRS, CVLT, CW, EHC, ESAB, FIVE, FN, FROG, GH, HLNE, LITE, LRN, MTSI, RKLB, RMBS, SITM, STEP, TSEM | AI, compounders, growth, industrials, innovation, semiconductors, small caps, technology |
GH EHC |
AI-related innovation and infrastructure build-out has remained robust, providing substantial opportunities. The fund benefits from AI ecosystem exposure through companies like Lumentum, which supplies lasers… |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q2 |
Growth |
|
| 2025 Q3 |
AIThe extended federal government shutdown added volatility during what was otherwise a risk-on environment, with a mid-quarter shift in market behavior for AI-related equities as the exuberant narrative evolved to one more balanced in assessing the technology's enormous potential against staggering capital spending plans and high expectations. The team initiated a position in Credo Technology as a more diversified way to gain exposure to strong trends in AI-connectivity. |
Connectivity Semiconductors Infrastructure Capital Spending |
IndustrialsThe fund increased exposure to high-quality industrial businesses with potential for cyclical upturn. Added Quanta Services for AI data center build-out, Hubbell for electrical grid upgrades, Old Dominion for freight cycle recovery, and Waste Connections for secondary market focus. |
Infrastructure Automation Transportation Electrical Equipment Waste Management | |
SemiconductorsMACOM Technology Solutions rose nearly +40% as the company experienced broad-based demand, similar to many semiconductor companies in 2025. The team exited Astera Labs following industry conference presentations that suggested emerging competitive risks and concerns over single customer concentration, while initiating a position in Credo Technology for AI-connectivity exposure. |
Demand Competition Connectivity Customer Concentration | |
| 2025 Q4 |
AIThe extended federal government shutdown added volatility during what was otherwise a risk-on environment, with a mid-quarter shift in market behavior for AI-related equities as the exuberant narrative evolved to one more balanced in assessing the technology's enormous potential against staggering capital spending plans and high expectations. The team initiated a position in Credo Technology as a more diversified way to gain exposure to strong trends in AI-connectivity. |
Connectivity Semiconductors Infrastructure Capital Spending |
IndustrialIndustrial real estate benefits from multi-year demand drivers including e-commerce growth, last mile infrastructure needs, onshoring trends, and shift from just-in-time to just-in-case inventory management. AI's physical manifestation through robotics and automation will require more industrial facilities. Fund owns Prologis, EastGroup Properties, and Terreno Realty. |
E-commerce Last Mile Onshoring Inventory Robotics | |
SemiconductorsMACOM Technology Solutions rose nearly +40% as the company experienced broad-based demand, similar to many semiconductor companies in 2025. The team exited Astera Labs following industry conference presentations that suggested emerging competitive risks and concerns over single customer concentration, while initiating a position in Credo Technology for AI-connectivity exposure. |
Demand Competition Connectivity Customer Concentration |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Jan 24, 2026 | Fund Letters | Ronald Zibelli | GH | Guardant Health Inc. | Health Care | Health Care Technology | Bull | NASDAQ | diagnostics, Genomics, growth, liquid biopsy, Oncology | Login |
| Jan 24, 2026 | Fund Letters | Ronald Zibelli | EHC | Encompass Health Corp. | Health Care | Health Care Facilities | Bull | New York Stock Exchange | Demographics, Healthcare services, Hospitals, Medicare, Rehabilitation | Login |
| TICKER | COMMENTARY |
|---|---|
| BTSG | Iradimed (IRMD) contributed over 100bp of return while Bright Spring (BTSG) and Sanmina (SANM) contributed better than 50bp each. |
| CRS | Carpenter Technology Corp. was one of the top five winners for the quarter. |
| CVLT | Commvault provides cyber resilience solutions. During the quarter, management reported softer-than-expected bookings and lost its chief financial officer to another company. |
| CW | We initiated Curtiss-Wright, consistent with our high-quality growth orientation. We believe Curtiss-Wright is entering a period in which multiple near-term growth drivers are converging, including rising defense budgets, commercial aerospace production ramps, nuclear power plant life extensions and new builds, and submarine production. |
| EHC | Although the fundamentals for EHC are steady, EHC is both a defensive business and a defensive stock in a market that wants offense |
| ESAB | ESAB is a global manufacturer and distributor of fabrication technology and gas control. The effect of tariffs on profit margins and the ongoing integration of its acquisition of EWM, an industrial welding equipment and automation company based in Germany, appear to have weighed on the stock. We sold ESAB and moved on as these headwinds have persisted. |
| FIVE | Five Below is a high-growth value retailer offering trend-right products to tweens, teens and their parents. Management changes (CEO, chief financial officer and chief market officer) in the past year have refocused the company's strategy. We believe the company's efforts are gaining traction, which provides an attractive opportunity. |
| FN | Fabrinet Information Technology 1.6 |
| FROG | Lastly was JFrog Ltd., the portfolio's strongest performer this quarter. JFrog manages the software supply chain and enables organizations to securely deliver software updates across their enterprises. Demand for security increased following the recent NPM supply chain attack. JFrog's security add-on—which secures open-source packages before organizations onboard them—has seen significant pipeline growth, driving a 32% rally in its shares. |
| GH | Guardant Health, a provider of blood-based diagnostic tests for cancer, performed particularly well, driven by strong Q3 results. Its core oncology business grew revenues 30% vs. 20% in the previous quarter, an acceleration driven by innovative product enhancements. Furthermore, its colon cancer screening tests continued to perform well, growing 50% sequentially from Q2. While shares were up significantly in 2025, we remain bullish on the business, as Guardant continues to lead the charge in converting oncology testing from tissue to blood. |
| HLNE | Hamilton Lane is an alternative asset manager. The stock underperformed, largely due to a pullback in the broader alternative asset manager group during the latter part of 2025. While company fundamentals appear solid, we saw better opportunities in other parts of the financial services sector so we sold the position. |
| LITE | Lumentum is a leading supplier of lasers to the AI ecosystem. The stock rallied due to strong demand for its products in hyperscale and AI data centers, along with general apparent optimism surrounding AI infrastructure stocks. |
| LRN | Stride is an education technology company that provides online education to K-12 students through virtual public schools and learning programs. The stock sold off more than 50% on earnings due to a failed platform upgrade that resulted in major student enrollment losses, poor customer experience, and high withdrawal rates. Given the seasonality inherent in their business model (fall enrollment is the main driver of fiscal year results), investors quickly moved on with the lack of an imminent catalyst until next fall. We eliminated our position during the quarter. |
| MTSI | Semiconductor holding MACOM Technology Solutions rose nearly +40%, as the company experienced broad-based demand, similar to many semiconductor companies in 2025. |
| RKLB | Industrials detracted from relative performance with nearly half of underperformance attributable to a single company we do not own, Rocket Lab, which returned +46% during the quarter. |
| RMBS | Rambus provides high-performance memory subsystems. We believe the company is a unique beneficiary of strong DRAM (dynamic random access memory) demand. |
| SITM | SiTime Corp is a semiconductor company that has revolutionized the market for timing devices with its MEMS-based silicon solutions, which act as the precise heartbeat for advanced electronics. The stock performed well during the quarter, propelled by 45% growth, led by 115% growth in its data center segment, reflecting the surging demand from AI applications. The company is successfully increasing its dollar content in these systems by selling more integrated and higher-value clocking solutions. In addition to its data center business, SiTime has a second growth driver: its chips are featured in Apple's latest iPhone Air and could potentially expand to other models in 2026. |
| TSEM | Tower Semiconductor is a foundry of analog semiconductor solutions. During the quarter, management reported strong results in its optical semiconductor business, leading management to pull forward the timeline for achieving its long-term goals. |
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