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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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The Baird Chautauqua International Growth Fund 2026 Q2 Investor Letter | Buyside Digest

Back to Fund Profile (The Baird Chautauqua International Growth Fund)

Primary Source Intelligence • Q2 2026 Letter Analysis

The Baird Chautauqua International Growth Fund Quarterly Analysis

Buyside Digest is not affiliated with, and does not endorse, The Baird Chautauqua International Growth Fund. This analysis is provided for institutional research purposes only and is not investment advice.

Fund Returns

QTD+10.39%

YTD-3.99%

Annualized+14.19%

Positioning StanceNEUTRAL

Market CapLarge Cap

GeographyGlobal

Digest Analysis

Quick Take

"Fund underperformed in Q2 as extreme market concentration favored narrow AI capex trade, but manager maintains five-year conviction. Portfolio declines driven by valuation compression, not earnings deterioration, creating coiled spring as intrinsic value rises while prices fall."

Executive Summary

Baird Chautauqua International Growth Fund returned 10.39% in Q2 2026, underperforming the MSCI ACWI ex-U.S. Index which returned 14.49%, as extreme market concentration favored a narrow AI capex trade. The fund benefited from overweights in TSMC, ASML, Keyence, and Fanuc but was hurt by underweight in memory stocks that posted triple-digit gains and by holdings in software, health care, and Greater China that continued to de-rate. Manager trimmed appreciated semiconductor and automation positions and redirected proceeds into higher conviction laggards including Adyen, Constellation Software, 3i, and AIA. Year-to-date portfolio declines have been driven by valuation compression rather than earnings deterioration, with revenues, profitability, and cash flow continuing to build even as multiples contracted. This divergence between rising intrinsic value and falling stock prices creates foundation for conviction over five-year investment horizon. Portfolio maintains deliberate overweights in Greater China secular growth areas and owns de-rated software and health care franchises whose competitive moats remain intact despite market treating them as structural AI casualties. Manager views current valuation compression as unusually attractive entry point for patient capital.

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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%)

Manager names 20+ individual positions with specific weightings and detailed company-level commentary. Explicitly states 'concentrate capital where our conviction is highest' and provides specific position sizing actions (trimmed TSMC, ASML, Keyence, Fanuc; added to Adyen, Constellation, 3i, AIA). Maintains deliberate overweights in underperforming areas (Greater China 18% International) with clear thesis defense. However, portfolio appears to hold 25-35 positions based on attribution tables, which is moderately concentrated but not extreme. Language is declarative about specific holdings but acknowledges uncertainty about macro outcomes. Score reflects named positions with sizing plus willingness to concentrate, but not Berkshire-level concentration.

Growth Outlook

38%

BearishBullish

Neutral (38%)

Manager acknowledges extreme market concentration at levels not seen since 1999 and questions durability of AI capex trade, noting skepticism about hyperscaler spending sustainability. However, also identifies constructive elements including energy relief, Germany's fiscal expansion, and valuation normalization opportunity. Language includes 'fragile,' 'unresolved,' and 'uncertainty' but balanced with 'constructive' and 'opportunity.' Net cautious but not bearish.

Risk Appetite

35%

DefensiveAggressive

Defensive (35%)

Manager trimmed appreciated positions (semiconductors, automation) but redirected proceeds into higher conviction laggards rather than raising cash. Maintained meaningful commitments to areas that hurt performance (Greater China 18% International, software, health care) despite recent pain. Selectively adding to beaten-down compounders signals willingness to deploy into weakness. Net long with selective risk-taking, not defensive but not maximum exposure either.

Capital Deployment

25%

De-riskingDeploying

De-risking (25%)

Manager trimmed appreciated positions and redirected proceeds into laggards, which is capital rotation rather than net deployment. No explicit cash level changes mentioned. Added to 'small number of higher conviction positions' and 'continued to build recently initiated positions' suggests modest net deployment but primarily rotation. Exited one position (Bank Rakyat) and reduced many others while increasing fewer names. Net activity is selective rebalancing with slight deployment bias, not aggressive putting cash to work.

Forward Guidance

40%

CautiousExpansionary

Neutral (40%)

Manager explicitly states 'we have used this volatility to concentrate capital where our conviction is highest' and describes current valuation compression as 'unusually attractive entry point for patient capital.' Actively adding to specific positions (Adyen, Constellation, 3i, AIA) and maintaining overweights in de-rated areas. Language is deployment-oriented with phrases like 'coiled spring' and 'foundation for conviction.' Clear bias toward selective adding rather than waiting.

Language Signal

15%

BearishBullish

Bearish (15%)

Language contains meaningful risk framing ('extreme concentration,' 'fragile,' 'unresolved,' 'uncertainty,' 'skepticism') balanced against opportunity language ('attractive,' 'conviction,' 'intact,' 'coiled spring,' 'foundation'). Directional language is mixed with both cautious macro framing and constructive positioning commentary. Risk language slightly outweighs bullish language in frequency, but bullish language is more declarative when present. Net slightly positive but close to neutral.

Perceived Risk

65%

Low RiskElevated

Elevated Risk (65%)

Manager identifies multiple specific macro risks with meaningful discussion: extreme market concentration at 1999 levels, AI capex sustainability questions, unresolved trade policy with July cliff, synchronized hawkish central bank moves, China demand weakness, U.S. labor market softening, Europe stagflation, and dollar strength headwind. Each risk is named and explained with context. However, risks are presented as navigable rather than existential, and manager maintains full investment posture. Risk discussion is substantial but not alarmed—cautious and analytical rather than defensive.

Opportunity Density

55%

ScarceAbundant

Selective (55%)

Manager describes 'unusually attractive entry point' and states 'we have used this volatility to concentrate capital where our conviction is highest,' indicating selective opportunities in specific areas. However, also notes market rewarded 'very little outside of the AI capex trade' and describes 'extreme concentration' limiting breadth. Opportunities exist in de-rated quality names (software, health care, Greater China) but are characterized as selective rather than abundant. Manager is finding enough to deploy into but emphasizes concentration into 'small number of higher conviction positions' rather than broad opportunity set.

Time Horizon

75%

Short-TermLong-Term

Decade+ (75%)

Manager explicitly states 'five-year investment horizon' multiple times and describes portfolio as positioned for 'patient capital.' Language emphasizes long-term value realization with phrases like 'coiled spring,' 'foundation for conviction,' and 'historically been well-positioned to recover as valuations normalize.' No near-term catalyst dependency discussed. Willing to hold through volatility and add to positions during drawdowns. However, not permanent capital structure (mutual fund with redemptions) and does discuss some near-term catalysts (July tariff cliff, November trade truces). Score reflects multi-year thesis with explicit 5-year framing but not decade-plus permanent capital.