| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 14.5% | -2.8% | 1.2% |
| 2025 | 2024 |
|---|---|
| 1.2% | 18.0% |
The Akre Focus ETF returned -2.80% in Q4 2025 versus 2.66% for the S&P 500, with full-year performance of 1.23% versus 17.88% for the index. The fund's quality-focused holdings underperformed as markets favored AI-related mega caps, creating the largest performance disparity between the S&P 500 and S&P 500 Quality Index since 1999. Key detractors included software companies like Constellation Software, Roper Technologies, and CCC Intelligent Solutions, which suffered valuation compression due to AI disruption concerns. However, the manager believes these fears are overblown and that their software holdings will be enormous beneficiaries of AI, given their customer intimacy, ecosystem dominance, and proprietary data advantages. The fund successfully converted to ETF structure in October 2025, maintaining its opportunistic cash deployment approach. With earnings expectations unchanged but valuations markedly improved, the manager maintains high conviction in the portfolio's quality businesses, viewing current conditions as creating enhanced value opportunities for patient, long-term investors.
Focus on high-quality businesses with durable competitive advantages that will benefit from AI adoption, maintaining concentrated positions with long-term perspective despite short-term underperformance.
The manager expresses strong conviction in the portfolio despite recent underperformance, noting that valuations have markedly improved while earnings expectations remain unchanged. They believe their combination of high concentration, long holding periods, and fundamental analysis will continue to be advantageous in a market increasingly driven by short-term momentum.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 12 2026 | 2025 Q4 | ABNB, BN, CCC, CSGP, CSU.TO, FICO, GOOGL, KKR, MA, MC.PA, MCO, MSFT, NVDA, ORLY, ROP, TOI.TO, V | AI, Concentration, ETF, Quality, software, value | - | The manager believes AI concerns about their software holdings are overblown and that their businesses will be enormous beneficiaries of AI. They argue that much… |
| Oct 10 2025 | 2025 Q3 | CEG | AI, Compounding, ETF, software, technology | CSU CN | The fund discusses volatility from Constellation Softwares drawdown but reaffirms conviction in vertical market software and decentralized business models. Akre highlights AI as an evolutionary… |
| Jul 15 2025 | 2025 Q2 | - | Compounding, drawdowns, durability, long-term, Quality | - | The letter discusses long-term compounding driven by business quality rather than short-term valuation bounces. Management uses drawdown research to show high-quality businesses recover and compound… |
| Apr 10 2025 | 2025 Q1 | - | - | - | - |
| Jan 11 2025 | 2024 Q4 | - | - | - | - |
| Oct 14 2024 | 2024 Q3 | - | - | - | - |
| Jul 14 2024 | 2024 Q2 | - | - | - | - |
| Apr 28 2024 | 2024 Q1 | - | - | - | - |
| Oct 1 2024 | 2023 Q4 | - | - | - | - |
| Oct 19 2023 | 2023 Q3 | BN, CSGP | - | - | - |
| Nov 7 2023 | 2023 Q2 | NVDA | - | - | - |
| Apr 14 2023 | 2023 Q1 | - | - | - | - |
| Jan 2 2022 | 2022 Q4 | - | - | - | - |
| Oct 10 2022 | 2022 Q3 | - | - | - | - |
| 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 |
ETFsThe fund's strategy focuses on closed-end funds rather than ETFs, but operates in the broader fund ecosystem. They compare performance against closed-end fund indices and utilize various fund structures in their investment approach. |
Closed-End Funds Fund Discounts Fund Selection Alternative Structures | |
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 | |
| 2025 Q3 |
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 |
Compounding |
||
Software |
||
| 2025 Q2 |
Compounding |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Oct 10, 2025 | Fund Letters | John Neff | CSU CN | Constellation Software Inc. | Information Technology | Application Software | Bull | TSX | AI, compounding, growth, leadership, M&A, resilience, Software, valuation, Verticals | Login |
| TICKER | COMMENTARY |
|---|---|
| ABNB | ABNB: $6B authorized August 2025; $3.7B repurchased |
| BN | Leading asset-rich alternative asset manager with deep domain expertise. Owns 73% of $84bn publicly-listed asset manager (Brookfield Asset Management) with significant value derived from asset-light, recurring management fee streams. We believe that deep domain expertise and best-in-class returns position Brookfield to benefit from multi-trillion-dollar wave of AI-related infrastructure investment. |
| CCC | CCC operates a vertically integrated, mission-critical software platform for the automotive insurance ecosystem. CCC commands a monopoly like position, handling over 80% of U.S. auto claims, and leverages scale, network effects, and high customer retention to maintain its competitive edge. This enables durable high-single-digit organic growth driven by product upsells and new customer wins in a fragmented repair market. The company is also benefiting from the digitalization of more complex auto claims. We own CCC in our SMID portfolio, and we believe the market is discounting a high-quality company amid short term concerns of slower growth from new product rollouts and AI risks. In reality, CCC's AI-powered offerings have helped its core business by enhancing claims automation, accuracy, and speed. CCC implemented an accelerated share repurchase program and insiders have been buying shares in the open market to show conviction in the business. We believe the margin of safety is supported by the business's stability and a management team with a strong track record of innovation. |
| CSGP | The shares of CoStar Group, Inc., the global leader in digitizing real estate, declined in the fourth quarter, due to concerns that the company's residential Homes.com platform will continue to require significant capital investment and competitive worries that Google's new real estate advertisement format and Zillow's OpenAI partnership could divert traffic from Homes.com in the years ahead. |
| CSU.TO | Broad pressure on the stocks of software companies enabled us to initiate a position in Constellation Software. This is a unique business we had on our radar for a long time but were never able to purchase due to its high valuation. At its core, the company is a permanent capital vehicle designed to acquire 'vertical market software' (VMS) businesses and hold them indefinitely. |
| FICO | Fair Isaac Corporation (FICO), a data and analytics company focused on predicting consumer behavior, contributed to performance. FICO reported strong quarterly financial results and solid fiscal 2026 guidance, which calls for 28% EPS growth. The company also launched its new Direct Licensing Program for mortgage lending, which provides greater flexibility to monetize its intellectual property. |
| 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. |
| KKR | Over the prior two years, KKR was one of the Fund's strongest contributors. From the end of 2022 through the end of 2024, the shares more than tripled, rising roughly 80% in 2023 and another 80% in 2024, as the market began to recognize the earnings power of its asset-management and insurance platforms. This year, the stock told a different story: in 2025 it was down about 13% and was roughly 23% below its January peak. Strip away the stock-price swings, and the business itself has continued to grow. Fee-related earnings, insurance earnings, and long-dated capital have all moved higher, even as market sentiment toward rates, credit, and capital flows into alternatives has become more cautious. |
| MA | The enduring appeal of card payments is their universality. Consumers trust that Visa and Mastercard will be accepted globally. After more than 20 years of litigation, Visa and Mastercard agreed to yet another settlement that gives merchants greater flexibility |
| MC.PA | Top gainers among the Fund's holdings included LVMH (+24%) |
| MCO | Moody's Corporation represents 13.9% of company owned with cost basis of $248 million and market value of $12,603 million, providing $93 million in 2025 dividends. |
| 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. |
| 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. |
| ORLY | Weakest performers included O'Reilly Automotive (-15%) |
| ROP | After a decade-long partnership with Roper Technologies, we have made a strategic decision to exit our position. Our decision to sell was based on three factors. Firstly, Roper's organic growth rates have begun to lag its pure-play software peers. Secondly, we believe many of these businesses are approaching market saturation, which limits their future growth prospects. Lastly, the valuation no longer provides an attractive margin of safety given the first two challenges. |
| TOI.TO | Detracting from performance were holdings of Constellation Software and spinoff Topicus despite strong underlying earnings amid concerns that AI could affect their software offerings |
| V | There were companies there such as Visa, which we own, as well as many we do not, and which would not likely be appropriate for this mandate. |
| Ticker | Put/Call | Amount Bought | Shares Bought | % Change | Weight % |
|---|---|---|---|---|---|
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| Ticker | Put/Call | Amount Sold | Shares Sold | % Change | Weight % | Status |
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