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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 SMID Cap Growth Strategy. This analysis is provided for institutional research purposes only and is not investment advice.
"Next Century's SMID Cap strategy surged 44.83% in Q2 2026, crushing benchmarks by over 2,000 basis points on exceptional semiconductor and AI infrastructure performance. Small caps delivered their strongest first half since 1991 as earnings accelerated and markets broadened."
Next Century Growth Investors' SMID Cap Growth Strategy delivered 44.83% net returns in Q2 2026, outperforming the Russell 2500 Growth Index by over 2,000 basis points, driven by exceptional stock selection in technology and industrials. Semiconductor holdings returned 90-120% in aggregate as AI infrastructure spending accelerated, with roughly $700 billion of hyperscaler capex committed for the year. Small caps posted their strongest first half since 1991, benefiting from accelerating earnings growth, attractive relative valuations, and market broadening beyond mega-caps. The manager trimmed technology positions after strong gains expanded valuations considerably, redeploying capital into health care, industrials, financials, and software. The portfolio added 10 new positions and exited 12 during the quarter. Looking ahead, the manager views conditions as especially favorable for small caps given accelerating fundamentals and reasonable valuations, while large cap growth faces elevated expectations. Key risks include above-target inflation at 4.2%, potential Fed rate hikes, and elevated valuations in parts of the market. The manager maintains conviction in high-quality growth businesses tied to durable, multi-year cycles including AI, semiconductors, data centers, defense, and onshoring.
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