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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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Madison Sustainable Equity Fund 2023 Q2 Investor Letter | Buyside Digest

Back to Fund Profile (Madison Sustainable Equity Fund)

Primary Source Intelligence • Q2 2023 Letter Analysis

Madison Sustainable Equity Fund Quarterly Analysis

Buyside Digest is not affiliated with, and does not endorse, Madison Sustainable Equity Fund. This analysis is provided for institutional research purposes only and is not investment advice.

Fund Returns

QTD+4.52%

YTD+4.52%

Annualized-11.32%

Positioning StanceConstructive

Market CapLarge Cap

GeographyUS

Digest Analysis

Quick Take

"Madison Sustainable Equity lagged in Q1 as quality underperformed in a narrow tech-led rally. Banking crisis created opportunities to add to US Bancorp while Oracle was added for cloud growth."

Executive Summary

Madison Sustainable Equity Fund returned 4.52% in Q1 2023, trailing the S&P 500's 7.5% gain due to narrow market leadership and high-quality underperformance. The quarter was marked by banking sector turmoil following Silicon Valley Bank's failure, though technology stocks rallied sharply. Top contributors included digitally-oriented holdings like Analog Devices, Alphabet, Qualcomm, and TE Connectivity, while US Bancorp, Eli Lilly, and Danaher detracted. The managers added to US Bancorp during banking weakness, established a new Oracle position based on improved cloud growth, and eliminated Automatic Data Processing due to peak employment concerns. Key risks include persistent inflation, slowing GDP growth, and potential earnings declines. However, with the Fed likely done hiking rates, the managers are cautiously optimistic about the remainder of 2023, using market volatility to upgrade the portfolio with attractively valued, high-quality companies positioned for long-term sustainable growth.

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Institutional Meta Strategy

Meta Strategy Gauges

Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.

Signal Matrix

Market Conviction

68%

CautiousHigh

Moderate (68%)

Fund holds 38 concentrated positions with detailed thesis for each major holding. Manager provides specific catalysts and timeframes (Qualcomm recovery in second half, Lilly data in mid-2023). Active position sizing decisions including adds and eliminates demonstrate moderate-high conviction.

Growth Outlook

38%

BearishBullish

Neutral (38%)

Manager acknowledges multiple headwinds including sticky inflation, slowing GDP growth, banking sector stress, and expects continued market volatility. However, sees potential peak in interest rates and is cautiously optimistic about remainder of 2023, preventing a more negative score.

Risk Appetite

15%

DefensiveAggressive

Defensive (15%)

Manager is selectively adding positions (US Bancorp, Oracle) and using volatility to upgrade portfolio, indicating modest risk appetite. However, also eliminated a position (ADP) due to concerns, showing balanced approach rather than aggressive deployment.

Capital Deployment

25%

De-riskingDeploying

De-risking (25%)

Manager added to US Bancorp position and established new Oracle position while eliminating ADP. Describes using volatility to upgrade portfolio, indicating selective net deployment but no dramatic cash level changes mentioned.

Forward Guidance

30%

CautiousExpansionary

Cautious (30%)

Manager explicitly states being cautiously optimistic about remainder of 2023 and is actively using volatility to upgrade portfolio with attractively valued companies. Clear intent to deploy capital selectively into quality names.

Language Signal

45%

BearishBullish

Balanced (45%)

Language contains significant risk discussion (inflation, banking crisis, earnings declines, volatility) balanced against opportunity language (upgrade portfolio, attractively valued, long-term growth). Slightly more cautious than bullish overall.

Perceived Risk

72%

Low RiskElevated

Elevated Risk (72%)

Manager identifies multiple specific risks including sticky inflation, slowing GDP growth, banking sector turmoil, potential earnings declines, and expects continued market volatility. Detailed discussion of macro headwinds throughout the letter.

Opportunity Density

60%

ScarceAbundant

Selective (60%)

Manager sees selective opportunities, describing companies becoming more attractively valued and actively upgrading portfolio. However, emphasizes selectivity and caution rather than abundant opportunities across markets.

Time Horizon

70%

Short-TermLong-Term

Decade+ (70%)

Manager discusses long-term growth positioning for holdings, multi-year catalysts (Lilly trials, Oracle cloud scaling), and sustainable business practices. Focus on companies adjusting strategy for long-term growth indicates patient capital approach.