The curated database of hedge funds that publish investor letters. Research by geography, strategy, and schools of thought.
| # | Fund | Strategy | Style | Geography | AUM | Latest Letter |
|---|---|---|---|---|---|---|
As of Oct 12, 2026
During the third quarter of 2026, the Madison Dividend Income Fund (Class I) advanced +0.5% net of fees, underperforming the S&P 500 Index (+2.3%) and the Russell 1000 Value Index (+2.6%), while marginally outpacing the Lipper Equity Income peer group (+0.1%). On a year-to-date basis, the fund delivered an +8.2% net return compared to +12.7% for the S&P 500 and +19.2% for the Russell 1000 Value. The strategy maintains an active share of 88.55% versus the S&P 500, a high-quality portfolio profile with 92% of holdings rated A- or better by S&P, and a cash allocation of 1.86% of net assets. The investment team highlights severe valuation and concentration risks within the broader equity market, where the S&P 500 trades at an all-time record 1-year forward price-to-sales multiple of 3.5x. Heavy index concentration in non-dividend paying mega-cap Technology and Communication Services names driven by artificial intelligence capital expenditures contrasts sharply with deeply discounted cyclical and income sectors. The manager emphasizes a constructive macro and fundamental case for the Energy sector, citing multi-decade lows in index weighting (4% combined with Materials) alongside robust capital discipline, modest balance sheet leverage, and attractive capital returns. Portfolio activity and positioning remain anchored in defensive, high-quality companies with durable moats and dividend yields well above the broader market. Top equity holdings include Johnson & Johnson (5.65%), Exxon Mobil (5.21%), and Chevron (5.07%), alongside diversified leaders such as AbbVie (3.77%) and Procter & Gamble (3.67%). The managers project that valuation mean-reversion toward historical multiples of 2.0x price-to-sales and sector re-weighting toward Energy will provide substantial downside protection and long-term relative outperformance.
Investing in high-quality, wide-moat companies with above-average dividend yields and disciplined capital allocation generates compelling long-term returns while providing defensive downside protection across market cycles.
The investment team anticipates that extreme index concentration and record price-to-sales valuations of 3.5x pose substantial risks of multiple contraction and market correction. They expect market conditions to normalize over the coming years, enabling Energy and Materials to expand back toward their long-term 10-12% combined index weighting from today's depressed 4% level. Consequently, portfolios tilted toward disciplined, cash-generative dividend growth with A- or better balance sheet ratings are positioned to deliver superior downside protection and competitive risk-adjusted returns across a full market cycle.
Neutral / Balanced
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