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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, NCG Small Cap Growth Strategy. This analysis is provided for institutional research purposes only and is not investment advice.
"Next Century Growth Investors' small cap strategy surged 45.4% in Q2 2026, crushing benchmarks by 2,000 basis points through concentrated AI infrastructure, semiconductor, and industrial exposure. Technology holdings returned 90-120% as AI capex conviction returned."
Next Century Growth Investors' small cap strategy returned 45.4% in Q2 2026, outperforming the Russell 2000 Growth Index by nearly 2,000 basis points, driven by concentrated exposure to AI infrastructure, semiconductors, and industrials. Technology holdings returned 90-120% in aggregate, powered by renewed conviction in AI capex sustainability and the Philadelphia Semiconductor Index's best quarter on record. Industrials contributed meaningfully through data-center site development, electrical infrastructure, aerospace and defense, and reshoring-linked manufacturing. The manager trimmed AI-exposed positions in April and May after sharp gains and valuation expansion, redeploying capital into health care, industrials, financials, and software. Small caps posted their strongest first half since 1991, and the manager views conditions as especially favorable for continued broadening given accelerating earnings, attractive relative valuations, and improving breadth. The portfolio maintains overweight positions in technology and industrials, with 30% and 29% allocations respectively. Corporate earnings are on pace for strong 2026 growth, and the removal of the Q1 energy shock has taken meaningful downside risk out of the near-term picture. The manager expects shifting leadership and dispersion to reward disciplined, fundamentally driven active management.
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