Commentary - December 2025Long Short Fund
With a focus on generating an attractive risk/return profile, the Portfolio Managers discuss their investment approach, where they are finding current opportunities, and recent changes in long and short positions.
Please summarize your approach to investing for the Cromwell Long Short Fund.
Our philosophy focuses on high-quality businesses with strong management teams, clear business improvement potential and a high level of free cash flow. A core pillar of our approach is finding companies where our view diverges from consensus. Our short positions reflect the opposite characteristics—deteriorating operating fundamentals, weak management, and unsustainable or erratic cash flow profiles.
We believe this focus has resulted in an attractive risk/return profile compared to the overall market and peers. In 2025, the Fund (MFLDX) has outperformed its Russell 1000 benchmark by 29 basis points with 20% lower risk. Impressively, the Fund’s 2025 return also matched the mega-cap technology weighted S&P 500 Index’s return.
How is the portfolio positioned to potentially benefit from increased artificial intelligence (AI) adoption?
In 2025, AI investing was primarily a narrow trade focused on large-cap technology-related companies. More recently, it has broadened significantly to encompass customers, partnerships and other use cases. Despite current bubble concerns that have driven the recent volatility, we believe the AI trend will continue but may play out differently over time. Increasingly, we anticipate well-run large- and mid-cap companies to adopt AI to drive productivity, which should help boost operating efficiencies and profitability.
For the Fund, we are focused on investing in high-quality mid- and large-cap businesses integrating AI processes to increase their productivity.
Fund Performance (as of 12/31/25) |
||||||
|---|---|---|---|---|---|---|
| AVERAGE ANNUAL RETURNS | STANDARD DEVIATION | |||||
| Class | YTD | 1 Yr | 5 Yr | 10 Yr | 1 Yr | |
| Institutional Class | 17.66 | 17.66 | 6.84 | 6.67 | 9.03 | |
| Russell 1000 Index | 17.37 | 17.37 | 13.59 | 14359 | 11.26 | |
Expense Ratios (gross/net): Institutional 2.09%/1.91%.
The performance data shown represents past performance. Past performance is not a guarantee of future results. Current performance may be lower or higher than the performance data quoted. The investment return and the principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. For performance information through the most recent month end please call 855.625.7333.
Cromwell Investment Advisors has agreed to waive its management fees and/or reimburse Fund expenses through at least 4/30/26. Performance would have been lower without fee waivers/limits/reimbursements in effect. Please refer to the prospectus for detailed information.
Would you please share an example or two of a recent long and short position?
Earlier this year, the Health Care sector was out of favor and among the worst-performing S&P sectors, driven by regulatory uncertainty, political rhetoric, and concerns around drug pricing. With many of those negative drivers in the rearview mirror, therapeutics, pharma, and biotech have more recently delivered strong returns. Within this recovery, we focused on life science tools companies, owning industry leaders including Thermo Fisher, and Danaher, which are gaining market share, led by exceptional management, and well positioned to benefit from a rebound in research and development and healthcare spending.
Conversely, we have been shorting sporting goods, athletic apparel, and select consumer-related companies facing a convergence of negative catalysts. Weakening consumer demand and declining restaurant traffic have pressured results for a few companies that have coupled high-growth concepts with aggressive expansion plans. These stocks have derated from elevated multiples, creating attractive short opportunities, particularly within the Consumer Staples and Discretionary sectors. An example of our shorts includes Freshpet Pet Food, a premium pet food company facing increased competition, which is slowing its ability to secure new shelf space compared with historical trends.
