In the fourth quarter of 2025, the Nomura Mid Cap Growth Fund demonstrated strong performance, surpassing its benchmark, the Russell Midcap Growth Index. This achievement took place against a backdrop of varied market conditions, where optimism surrounding AI-driven growth coexisted with growing concerns about corporate profitability, spending patterns, and broader economic instability. The period saw a notable shift in market dynamics, with certain sectors gaining prominence while others faced headwinds from a weakening labor market and significant layoffs.

Fund Performance Amidst Market Volatility

The Nomura Mid Cap Growth Fund's outperformance in the fourth quarter of 2025 was a testament to its strategic positioning and astute investment decisions within a dynamic market landscape. Despite the overarching themes of AI optimism and increasing scrutiny on corporate fundamentals, the fund navigated these complexities effectively. The quarter presented a challenging environment, marked by a rise in unemployment to a four-year high in November and widespread layoffs across the technology and consumer-oriented industries. However, the fund's ability to identify and capitalize on opportunities, particularly in sectors that showed resilience or emergent growth, contributed significantly to its positive results. This performance highlights the importance of active management and a nuanced understanding of market shifts to generate alpha even in volatile conditions.

The market environment during Q4 2025 was a blend of contrasting forces. While the enthusiasm for artificial intelligence continued to fuel growth expectations in certain segments, a more cautious sentiment began to emerge regarding corporate earnings and overall economic health. This was evident in the labor market, which experienced a noticeable weakening, and in the strategic layoffs undertaken by several prominent companies. Amidst these broader trends, the healthcare sector, especially pharmaceuticals, exhibited a strong resurgence towards the end of the quarter, becoming a key driver of market performance. The Nomura Mid Cap Growth Fund's success in this period suggests a well-executed strategy that likely involved overweighting sectors with favorable tailwinds and selecting individual companies demonstrating robust fundamentals and growth potential, thereby insulating the portfolio from broader market downturns in specific areas and capturing gains from emerging leadership.

Strategic Positioning and Future Outlook

Looking ahead, the Nomura Mid Cap Growth Fund is strategically positioned to navigate anticipated market complexities by maintaining overweight allocations in information technology, healthcare, and industrials. This forward-looking stance is underpinned by a rigorous selection process that targets companies characterized by sustainable competitive advantages, strong profit margins, and solid financial health. Such a focus is crucial for mitigating risks associated with macroeconomic uncertainties, potential policy shifts, and the evolving impact of AI on various industries. The fund aims to leverage these fundamental strengths to achieve sustained growth, reflecting a proactive approach to investment management in an unpredictable economic climate. This strategy prioritizes long-term resilience and value creation over short-term market fluctuations.

The investment landscape for 2026 is expected to be shaped by several key factors, including persistent macroeconomic uncertainty, potential shifts in governmental and regulatory policies, and the continuing influence of artificial intelligence on business models and competitive dynamics. In this environment, investor attention is anticipated to gravitate towards companies that can demonstrate consistent profitability, robust free cash flow generation, and a disciplined approach to capital allocation. The Nomura Mid Cap Growth Fund's strategy of emphasizing companies with durable advantages and resilient financials is directly aligned with these emerging investor preferences. By focusing on businesses that are well-equipped to withstand economic pressures and adapt to technological advancements, the fund seeks to deliver compelling returns while effectively managing the inherent risks of a complex market, ensuring readiness for future challenges and opportunities alike.