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| # | Fund | Strategy | Style | Geography | AUM | Latest Letter |
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As of Oct 12, 2026
During the third quarter of 2026, the Madison Mid Cap Fund (Class I) returned -2.09% net of fees, outperforming the benchmark Russell Midcap Index, which declined -3.00% net. Year-to-date, the fund posted a net return of +1.74% compared to +11.84% for the benchmark. The strategy maintained a concentrated portfolio of 36 holdings with an active share of 96.92%, holding 44.19% of net assets across its top 10 positions and carrying a 4.50% cash allocation. Performance was led by relative resilience in healthcare holdings and technology advisory firm Gartner, while cyclical and interest-rate-sensitive holdings detracted. The macroeconomic environment shifted over the quarter as persistent energy costs and rising interest rates placed downward pressure on economically sensitive and rate-sensitive businesses. This resulted in sharp market-wide rotations, with over half of the Russell 3000 constituents experiencing drawdowns exceeding 20% since June. The manager also observed that the market's intense focus on AI data center infrastructure capital spending has led to severe valuation compression across high-quality, capital-light business models, presenting selective entry opportunities as the data center capital expenditure cycle matures. Portfolio activity was marked by the establishment of new positions in insurance broker Arthur J. Gallagher & Co. and life sciences tools provider Revvity, capitalizing on market concerns around AI disruption and business transformation. The fund also increased its weighting in analytical instruments supplier Waters Corporation following asset acquisitions. Capital for these additions was generated in part by completely exiting the long-standing position in IT reseller CDW Corporation after waning confidence in management's handling of reinvestment requirements.
Invest in high-quality, resilient mid-cap companies with secular growth drivers and competitive moats capable of compounding value across full market cycles.
The team expects corporate earnings to exhibit continued resilience despite ongoing headwinds from higher interest rates and elevated energy costs. While the massive capital expenditures pouring into AI data centers will eventually peak and decline, recent market skepticism toward capital-light businesses has created attractive mispricings. Madison intends to stay positioned in durable, cycle-tested companies possessing enduring competitive advantages.
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