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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
|---|---|---|---|---|---|---|---|
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 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."
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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