| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 9.9% | - | 5.6% |
| 2025 |
|---|
| 5.6% |
Jensen Quality Growth Fund delivered 5.57% net returns through November 2025 but lagged the S&P 500 by 12.23 percentage points as market concentration in mega-cap AI stocks created headwinds for quality-focused strategies. The fund deliberately maintained its quality discipline rather than chasing momentum, though the portfolio has evolved to include AI beneficiaries like Nvidia, Amazon, and Meta that now meet return on equity standards. Top contributors included KLA Corporation, Amphenol, and Eli Lilly, while detractors included Accenture, Marsh McLennan, and Copart. The manager sold positions facing AI disruption risk while adding foundational technology enablers. Factor trends favored high-growth and high-volatility stocks over quality metrics. Looking ahead, Jensen expects relative performance to improve as market leadership broadens beyond AI concentration and quality characteristics reassert themselves. The portfolio balances participation in digital transformation with diversification across sectors, emphasizing businesses capable of compounding value through full market cycles while maintaining competitive advantages and cash generation.
Jensen maintains a quality-focused discipline investing in businesses with durable cash generation, competitive advantages, and consistent returns on equity, adapting the portfolio to include AI beneficiaries that now meet quality criteria while preserving diversification and resilience for long-term value creation.
The manager expects relative fund performance to positively reassert itself when the market environment normalizes, as disciplined stock selection and business quality tend to reassert themselves when market leadership broadens beyond narrow AI concentration. The portfolio is positioned to participate meaningfully in continued AI-driven growth while maintaining the resilience that has defined the investment discipline through multiple market cycles.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 22 2026 | 2025 Q4 | AAPL, ACN, AMZN, APH, AVGO, BRK.B, CPRT, GOOGL, JPM, KLAC, LLY, META, MMC, MSFT, MU, NVDA, STX, TSLA, WDC, WM | AI, growth, large cap, Market Concentration, Quality, semiconductors, technology |
KLAC APH LLY ACN MMC CPRT WM SYK AVGO |
The AI investment cycle is maturing with prominent beneficiaries beginning to meet quality criteria as earnings become more sustainable and competitive advantages emerge. The portfolio now includes foundational AI enablers like Nvidia, Amazon, Meta, and KLA Corporation as highly profitable, cash-generative businesses with dominant positions in computing and semiconductor ecosystems. Jensen maintains focus on businesses with durable cash generation, resilience, and consistent returns on equity rather than abandoning discipline for momentum-driven rallies. The strategy emphasizes companies capable of compounding economic value over full cycles with strong competitive advantages and financial strength. Semiconductor equipment companies like KLA Corporation benefit from growing investor recognition of pricing power and mission-critical roles in advanced chip manufacturing. The sector saw broadening beyond consensus AI winners to reward memory and storage beneficiaries like Western Digital, Seagate, and Micron. The ten largest S&P 500 weightings comprised 38.29% of the Index and accounted for 55.40% of total returns, creating headwinds for strategies underweight these mega-cap leaders. This concentration in AI-related companies has been a defining feature since late 2022. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
AIAI has been integrated into RGA's research process through tools like NotebookLM, Gems in Gemini, and Claude Code. The firm views AI as a force multiplier for human judgment rather than a replacement, emphasizing the Kasparov Law principle. They believe the market narrative around AI displacement is swinging to unhelpful extremes, creating investment opportunities. |
Machine Learning Automation Software Productivity Innovation |
Market ConcentrationThe ten largest S&P 500 weightings comprised 38.29% of the Index and accounted for 55.40% of total returns, creating headwinds for strategies underweight these mega-cap leaders. This concentration in AI-related companies has been a defining feature since late 2022. |
Mega Cap Index Concentration Market Leadership AI Winners Large Cap Dominance | |
QualityThe company emphasizes investing in businesses with excellent economics, durable competitive advantages, and high-integrity management. This quality focus is evident in concentrated equity holdings and operating business acquisitions. |
Durable Advantages Management Quality Economic Moats Competitive Position | |
SemiconductorsRGA initiated a position in Lattice Semiconductor, viewing it as an under-appreciated AI winner with immediate gains and longer-term optionality. Lattice's focus on efficiency and advantages in low-power, small footprint FPGAs position it favorably for AI servers, particularly as the only Post-Quantum Cryptography secure chips on the market. |
FPGAs Security Efficiency AI Infrastructure Programmable |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Jan 22, 2026 | Fund Letters | Allen T. Bond | KLAC | KLA Corporation | Information Technology | Semiconductor Materials & Equipment | Bull | NASDAQ | AI, Inspection, Metrology, Pricing power, process control, Wafer fab | Login |
| Jan 22, 2026 | Fund Letters | Allen T. Bond | APH | Amphenol Corporation | Information Technology | Electronic Components | Bull | New York Stock Exchange | AI, Connectors, datacenter, Interconnect, Sensors, valuation | Login |
| Jan 22, 2026 | Fund Letters | Allen T. Bond | LLY | Eli Lilly and Company | Health Care | Pharmaceuticals | Bull | New York Stock Exchange | Diabetes, GLP-1, innovation, Obesity, pipeline, Reimbursement | Login |
| Jan 22, 2026 | Fund Letters | Allen T. Bond | ACN | Accenture plc | Information Technology | IT Consulting & Other Services | Bear | New York Stock Exchange | Automation, cloud, Consulting, Cyber security, disruption, Outsourcing | Login |
| Jan 22, 2026 | Fund Letters | Allen T. Bond | MMC | Marsh & McLennan Companies, Inc. | Financials | Insurance Brokers | Bull | New York Stock Exchange | Brokerage, cashflow, Consulting, Insurance, Retention, valuation | Login |
| Jan 22, 2026 | Fund Letters | Allen T. Bond | CPRT | Copart, Inc. | Industrials | Diversified Support Services | Bull | NASDAQ | Auctions, cashflow, duopoly, Real Estate, Remarketing, Salvage | Login |
| Jan 22, 2026 | Fund Letters | Allen T. Bond | WM | Waste Management, Inc. | Industrials | Environmental & Facilities Services | Bull | New York Stock Exchange | Automation, Landfills, Pricing power, Recycling, RNG, waste | Login |
| Jan 22, 2026 | Fund Letters | Allen T. Bond | SYK | Stryker Corporation | Health Care | Health Care Equipment | Bull | New York Stock Exchange | Ambulatory, Demographics, International, Medtech, Orthopedics, robotics | Login |
| Jan 22, 2026 | Fund Letters | Allen T. Bond | AVGO | Broadcom Inc. | Information Technology | Semiconductors | Bull | NASDAQ | Asic, Concentration, datacenter, Networking, semiconductors, Volatility | Login |
| TICKER | COMMENTARY |
|---|---|
| AAPL | Apple Inc. represents 1.6% of company owned with cost basis of $6,255 million and market value of $61,962 million, providing $280 million in 2025 dividends. |
| ACN | Accenture is the world's leading IT consultant, with advantages stemming from their depth and breadth across products, geographies, and industries. Over the last four years, Accenture's valuation has roughly halved. They've faced headwinds in IT spending and suffered from the perception that they are an AI loser. We believe that AI will cause deflationary pressure in parts of their business, but that it will be more than offset by the work required for enterprises to adopt AI. This is recently evidenced by partnerships with OpenAI and Anthropic. |
| AMZN | One company we own that we think has unique positioning to benefit from both the infrastructure and application layers is Amazon. Amazon's logistical prowess is one of the foremost moats in business today and it can and will be enhanced with AI. The company will do this in multiple ways, with better orchestration of its logistics assets and underlying cargo, as well as the buildout of more capable, sophisticated and robust robotics. Amazon is singularly well positioned to dominate the coordination layer, with AI's help, across its entire logistics network. |
| APH | We trimmed Amphenol Corp. |
| AVGO | The primary contributors to its performance were our exposures to Broadcom |
| BRK.B | Berkshire remains a cornerstone holding because it is a permanent capital system built to compound per share intrinsic value through cycles. Disciplined insurance underwriting creates float that can be invested over long horizons, while a diversified set of operating businesses generates durable cash flows that management redeploys with unusual rationality. Berkshire's 10.9% return in 2025 reflected steady per share value accumulation, supported by profitable underwriting and the management of its record $382 billion cash balance. |
| CPRT | we recently trimmed some of our mega-cap tech holdings and other outperformers and used the proceeds to buy more of our underperforming holdings such as Copart, Inc. |
| GOOGL | In the third quarter, Google, Kairos Power, and the Tennessee Valley Authority announced a major collaboration centered on a novel power purchase agreement. Google followed this announcement with another significant step forward. On October 27, Google and NextEra Energy announced plans to restart the Duane Arnold Energy Center. |
| JPM | JPMorgan (JPM) has identified 42 AI-related stocks in the S&P 500, which today represent 45% of the index's market cap. They estimate that these stocks have accounted for 78% of S&P 500 returns, 66% of earnings growth, and 71% of capital spending growth since ChatGPT launched in November 2022. As it relates to the impact on the U.S. economy, JPM estimates tech sector capital spending contributed 40%-45% of U.S. GDP growth through the first 9 months of the year, up from less than 5% during the same period in 2023. |
| KLAC | KLA Corporation (KLAC) is a leading global semiconductor production equipment manufacturer, specializing in process control tools that detect and reduce defects in advanced chip manufacturing. The share price advance in 2025 reflects growing investor recognition of KLA's pricing power, structural growth, and mission-critical role in advanced semiconductor fabrication. We reduced the position during the year in order to capture strong gains, but the company remains a core portfolio holding. |
| LLY | Eli Lilly shares were a top performer in 4Q25 after delivering strong Q3 2025 earnings in October. Revenue rose 54% year-over-year to $17.6 billion, and adjusted EPS of $7.02 beat consensus of $6.02. Growth was driven by its GLP-1 franchises, Mounjaro and Zepbound, where sales more than doubled year-over-year, alongside strength in other therapeutic areas. Management raised full-year guidance for both revenue and earnings, reinforcing investor confidence in the company's growth outlook. |
| META | On January 9, Meta Platforms unveiled a new agreement with Vistra—the largest generator of competitive electricity in the United States—as well as with TerraPower and Oklo. The announcement builds on Meta's agreement last year with Constellation Energy and positions the company to become one of the largest corporate purchasers of nuclear-generated electricity in the United States. |
| MMC | We added global insurance broker Marsh & McLennan Companies Inc. (MMC), as well as specialty chemicals manufacturer Eastman Chemicals Co (EMN). Marsh strikes us as a quintessentially good business trading at a reasonable valuation – a relatively rare combination with broad market indices trading near all-time highs. |
| MSFT | MSFT was a detractor in 4Q25 following its fiscal first-quarter 2026 earnings report released on October 29. While results were better than expected operationally, investor reaction was driven by guidance and capital expenditure intensity rather than headline performance. Revenue grew 17% year-over-year, exceeding consensus expectations, and Azure revenue increased 39% year-over-year, also ahead of estimates. However, management guided to a sequential deceleration in Azure growth in fiscal Q2, signaling some moderation after a period of exceptional demand. |
| MU | Core gains were led by investments in the Technology sector including Micron |
| NVDA | AI bellwether NVIDIA's very strong set of earnings in late November helped the AI theme re-assert its dominance when investors breathed a sigh of relief following the results. |
| STX | Some of our top performing closed positions: STX 53% |
| TSLA | Under the previous system, companies that produced only electric vehicles—most notably Tesla—generated large quantities of credits that could then be sold to manufacturers falling short of their EV production targets, allowing them to avoid regulatory penalties. |
| WDC | Sandisk is a provider of high-performance flash memory storage products (Solid State Drives, memory cards, and USB Flash Drives, etc.). AI requires immense volumes of fast, high-capacity data storage in data centers, edge devices, and consumer products, creating strong demand for its flash memory solutions which in turn allowed the company to exercise pricing power. This all culminated in very strong results and raised guidance during the quarter, as the company appears poised to experience AI-related tailwinds for the foreseeable future. |
| WM | Waste Management (WM) is the largest integrated waste collection, transfer, and disposal company in North America. Its large active weight in the Fund reflects our confidence in the business. WM's unmatched landfill and transfer station network creates formidable barriers to entry, supporting durable pricing power and steady cash flows. We view the company as uniquely positioned to enhance returns through landfill gas capture and automation investments that improve efficiency, margins, and long-term profitability. |
| Ticker | Put/Call | Amount Bought | Shares Bought | % Change | Weight % |
|---|---|---|---|---|---|
| No Recent Buys Data | |||||
| Ticker | Put/Call | Amount Sold | Shares Sold | % Change | Weight % | Status |
|---|---|---|---|---|---|---|
| No Recent Sells Data | ||||||
| Industry | Prev Quarter % | Current Quarter % | Change |
|---|---|---|---|
| No industry data available | |||
