The Virtus KAR Small-Mid Cap Growth Fund's performance during the third quarter of 2025 indicated a slight decline, with a Class I return of -1.95%, which did not match the gains of the Russell 2500\u2122 Growth Index. The broader market saw significant momentum, particularly in the large-cap growth sector, driven largely by advancements in technology and artificial intelligence, as evidenced by the Russell 1000\u00ae Growth Index's 10.51% increase. This positive trend, however, did not fully translate to the small-cap segment, where the fund primarily operates, leading to its underperformance.
Amidst this challenging quarter for smaller growth companies, certain holdings within the fund demonstrated notable resilience and contributed positively to its overall results. Specifically, Celsius and AAON emerged as the top performers, providing a much-needed boost to the fund's returns. Conversely, FactSet Research Systems and Ryan Specialty were identified as the primary factors detracting from the fund's performance during the same period, highlighting areas that faced headwinds or did not meet expectations within their respective sectors.
Understanding the dynamics of the Virtus KAR Small-Mid Cap Growth Fund's performance requires a comprehensive look at both the individual stock contributions and the broader market environment. Despite the mixed results, the fund's focus on identifying promising small- and mid-cap growth opportunities remains steadfast, aiming to navigate market fluctuations and capitalize on long-term potential. This strategic approach, coupled with careful selection and continuous monitoring, is crucial for achieving sustained growth and delivering value to investors.
