The Touchstone Sands Capital Select Growth Fund experienced a period of relative underperformance in the third quarter of 2025. This was primarily attributed to its strategic positioning within the 'Magnificent 7' group of companies. Despite this, businesses recognized as key facilitators of artificial intelligence made significant positive contributions to the fund's overall returns. Furthermore, consumer internet enterprises saw growth driven by unique factors in e-commerce, advertising, and gaming. The fund continues to hold investments in essential software categories, including infrastructure, security, and specialized sectors.
Touchstone Sands Capital Select Growth Fund's Q3 2025 Performance Overview
In the third quarter of 2025, the Touchstone Sands Capital Select Growth Fund recorded performance that lagged behind its primary benchmark, the Russell 1000® Growth Index. This divergence was largely influenced by the fund's specific allocations within what are commonly referred to as the 'Magnificent 7' stocks. While some investment choices led to this relative underperformance, several holdings demonstrated considerable strength. Notably, companies that are instrumental in advancing artificial intelligence technologies were significant positive contributors to the fund's absolute returns during this period. Additionally, firms in the consumer internet domain, encompassing areas such as e-commerce, digital advertising, and online gaming, showcased robust growth, fueled by distinct market dynamics. Looking ahead, the fund maintains a diversified portfolio of software businesses, focusing on critical segments like infrastructure management, cybersecurity, and specialized vertical applications. Among its notable holdings in these areas are Axon Enterprise, Cloudflare, Datadog, Samsara, and Shopify, indicating a continued commitment to these strategic sectors despite the recent quarter's challenges.
This performance review underscores the intricate balance of investment strategies in a dynamic market. While benchmark comparisons are crucial, understanding the underlying factors, both positive and negative, provides a more comprehensive picture. The fund's continued emphasis on AI and core software categories reflects a forward-looking approach, aiming to capitalize on long-term technological trends and sector-specific growth opportunities.
