The Columbia International Dividend Income Fund's Institutional Class shares posted a 5.20% return for the third quarter ending September 30, 2025. This performance was below its benchmark, the MSCI ACWI ex USA Index (net), which saw a 6.89% return during the same timeframe. The fund's relative underperformance was primarily attributed to both its choices in individual stocks and its allocation across various market sectors.
During the third quarter of 2025, global markets outside the U.S. generally showed robust growth, continuing the positive momentum from the first half of the year. The MSCI ACWI ex USA Index, serving as the benchmark for international equities, recorded a notable return of 6.89%. This broad positive trend encompassed most sectors, with ten out of the eleven sectors within the benchmark demonstrating favorable performance.
Despite the overall positive market environment, the Columbia International Dividend Income Fund faced specific challenges. The fund's strategy involves a careful selection of stocks, particularly those offering consistent dividend income, and a deliberate allocation of assets across different economic sectors. However, in the third quarter, these strategic choices did not translate into superior performance relative to the broader market index.
Further analysis indicates that the individual stocks chosen by the fund's managers did not yield returns as high as those in the benchmark. Concurrently, the fund's sector allocations, which dictate how much capital is invested in various industries, also worked against its performance. This suggests that the sectors where the fund had higher exposure might have underperformed compared to other sectors within the index, or that its underweight positions in high-performing sectors may have led to missed opportunities.
In essence, the third quarter of 2025 presented a mixed picture for the Columbia International Dividend Income Fund. While the global market context was largely positive, the fund's internal investment decisions regarding stock picks and sector weightings contributed to its trailing the benchmark's strong gains. This highlights the ongoing challenge for active managers to consistently outperform broad market indices.
