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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
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"Akre Focus ETF suffered material underperformance in 2025 as AI hype triggered a historic gap between the S&P 500 and quality compounders; however, the manager is holding firm, arguing that software incumbents are undervalued and will ultimately be AI's largest winners."
The Akre Focus ETF's Q4 2025 return was -2.80% (NAV) compared to 2.66% for the S&P 500, capping off a trailing 12-month return of 1.23% vs. 17.88% for the index. The performance lag was primarily caused by a dramatic market disparity in 2025, where the S&P 500 beat the S&P 500 Quality Index by 445 basis points (the widest gap since 1999) due to the hype around 'AI darlings'. Akre's key software positions (Constellation Software, Roper, CCC Intelligent Solutions, CoStar Group) experienced multiple compression due to unfounded market fears that AI would disrupt them. However, Akre strongly believes that these established incumbents possess the customer intimacy, proprietary data, and workflows that will actually make them the biggest beneficiaries of AI, while AI tool providers will face intense commoditization. Additionally, the manager explained the fund's non-standard, cash-centric approach to ETF creation/redemption baskets, designed to support opportunistic capital deployment without diluting returns.
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