This report provides a comprehensive review of market activities and fund performance during the third quarter of 2025, with a particular focus on the robust growth in the technology sector and its primary drivers. It also details the Madison Mid Cap Fund's specific contributions and challenges within this dynamic financial landscape.
Navigating the Tech Wave: Opportunities and Challenges in the Midcap Market
The Surging Tide of Technology and AI
The third quarter of 2025 witnessed a notable acceleration in the total returns of the Russell Mid Cap Index. Information Technology emerged as the leading sector during this period, maintaining its strong performance year-to-date after an initial sluggish start to the year. This impressive showing largely stems from a pervasive excitement around artificial intelligence (AI) advancements and a parallel increase in momentum-based investment approaches that frequently accompany such market sentiments.
Madison Mid Cap Fund's Q3 Performance
Despite the broader market's vigor, the Madison Mid Cap Fund (Class I) recorded a 1.9% increase in the third quarter of 2025. This performance, while positive, trailed the Russell Midcap Index's more substantial 5.3% growth. The fund's holdings in the technology sector, including prominent names like Amphenol, Arista Networks, and MKS, were instrumental in contributing to its gains, reflecting the overall strength in tech. However, not all components performed favorably.
Sectoral Dynamics and Key Stock Movements
A significant drag on the fund's performance came from Liberty Broadband, a company whose valuation is predominantly tied to its ownership in Charter Communications. Charter reported a less-than-stellar quarter, marked by a decline in profitability and a reduction in broadband subscribers, which negatively impacted Liberty Broadband's share price. This highlights the nuanced challenges even within a generally buoyant market, where individual company performance and sector-specific headwinds can influence portfolio returns. Such movements underscore the importance of discerning stock selection.
Commitment to Value-Oriented Investing
In light of these market conditions, the fund management reaffirms its ongoing strategy: a diligent pursuit of high-quality companies characterized by strong, shareholder-focused management teams. The objective remains to identify and invest in businesses that are currently valued below their assessed intrinsic worth. This disciplined approach aims to capture long-term value, mitigating the impacts of short-term market fluctuations and sector-specific downturns. The fund's commitment to fundamental analysis and intrinsic value remains a cornerstone of its investment philosophy.
