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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
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Buyside Digest is not affiliated with, and does not endorse, Baird Small/Mid Cap Growth Equity Fund. This analysis is provided for institutional research purposes only and is not investment advice.
"Baird Small/Mid Cap Growth returned 17.7% in Q2 2026 but underperformed the benchmark's 24.0% due to factor headwinds as AI-driven momentum stocks dominated. The manager actively repositioned into data center infrastructure and software while maintaining diversified consumer and healthcare exposure."
The Baird Small/Mid Cap Growth strategy returned 17.7% net in Q2 2026, underperforming the Russell 2500 Growth Index's 24.0% return primarily due to factor exposures as high volatility, high beta, high momentum stocks significantly outperformed. AI remained the dominant investment theme, with hyperscale cloud providers increasing capital spending on data centers and infrastructure, driving historic semiconductor gains. The manager actively repositioned the portfolio, adding data center infrastructure exposure through AAON, Modine, Generac, and Centuri, while increasing software exposure with Agilysys. Consumer discretionary contributed positively with strong performance from Victoria's Secret, Crocs, and Kontoor Brands. The manager added three commercial-stage therapeutics companies to healthcare exposure. While acknowledging that rapidly rising AI expectations and concentrated market leadership suggest building risk, the manager is encouraged by broadening market participation beyond semiconductors. The philosophy remains unchanged: seeking high-quality businesses with durable competitive advantages while maintaining discipline and balancing opportunity against risk to produce better long-term investment outcomes.
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