Insights

The Portfolio Managers discuss their risk-minded approach, explain why they believe the Fund’s holdings are well positioned for volatile markets, and highlight a top- and bottom-performing holding during the first half of 2025.

With the volatility during the first half of 2025, how did the Fund’s performance reflect your focus on risk management?

The Cromwell Greenspring Mid Cap Fund gained 8.22% in the second quarter, similar to the 8.53% total return of the Russell Midcap Index. These gains, achieved amid historically turbulent market conditions, more than offset the Fund’s first quarter decline, bringing the year-to-date total return to 3.57%.

A core principle of our investment approach is to protect capital during steep market selloffs. This helps shareholders remain invested during challenging markets, enabling them the potential to benefit from market recoveries, thus compounding returns over time.

This principle was evident earlier this year. During the steep and rapid decline in the Russell Midcap Index from its peak on February 18 to its April 8 low, the Fund declined significantly less, outperforming the Index by nearly 330 basis points.

Over longer periods, this approach has also delivered strong results. Over the past five years, the Fund’s equity investments achieved an annualized return of 17.36%, exceeding the Index’s 13.11% return with, importantly, less volatility.

Why are the companies in the Fund well suited to navigate periods of market volatility?

Our focus is on owning domestically oriented companies with strong financial foundations, robust free cash flow generation, and experienced, shareholder-oriented management teams. These characteristics typically better position our holdings to withstand economic turbulence and capitalize on market dislocations to opportunistically enhance long-term shareholder value.

For example, despite the market volatility during the first half of the year, several Fund holdings continued to implement long-term value creation strategies by executing strategic acquisitions, repurchasing shares at attractive valuations, and/or advancing organic growth initiatives. Over the 12 months ended June 30, 2025, 85% of the Fund’s holdings repurchased shares, nearly 80% paid dividends, and 43% reduced their total debt.

Many portfolio companies may also benefit from secular demand tailwinds or company-specific catalysts that may help provide a cushion against broad market weakness and attract investor interest during market recoveries.

Would you please discuss a top- and bottom-performing holding over the first half of 2025?

EMCOR was a top contributor to performance in the first half of 2025. As a large national mechanical and electrical contractor, EMCOR is experiencing robust growth in revenue, profitability, and project backlog. Demand for EMCOR’s services is being fueled by several of its end markets being in the midst of multi-year growth cycles. In particular, EMCOR is benefiting from the rapid growth of data centers, as well as the expansion and reshoring of many pharmaceutical, industrial, and manufacturing operations. We remain confident in EMCOR’s ability to create long-term shareholder value as its management team continues to deliver strong fundamental results and wisely deploys capital.

Conversely, one of the largest detractors from first-half performance was KBR, a provider of government, engineering, and construction management services. While its segment serving the energy, chemicals, and industrial markets remained strong and highly profitable, investor concerns emerged over possible funding constraints tied to DOGE-related programs in its government services division. These concerns were compounded by the termination of a large contract late in the second quarter, pressuring the stock price. We believe the current valuation reflects these challenges, and KBR’s strong financial foundation gives management the flexibility to successfully adapt to changing industry dynamics and potentially generate attractive long-term returns.