Insights

The Portfolio Managers discuss the current equity market, portfolio positioning, and mid-cap opportunities.

Would you please discuss the key themes that influenced equity markets during the first half of 2026?

Two themes largely shaped equity markets during the second quarter of 2026.

First, the continued expansion of artificial intelligence (AI). Companies providing AI infrastructure, including semiconductor, data center, and power businesses, continued to benefit from strong investment and demand. At the same time, concerns that AI could disrupt traditional software business models weighed on many software companies, leading to meaningful valuation compression despite generally healthy fundamentals.

Second, renewed attention to energy security. Geopolitical tensions in the Middle East reinforced the strategic importance of conventional energy. Although the Energy sector remains underrepresented in the S&P 500 Index relative to historical levels, oil and natural gas continue to play essential roles in transportation, manufacturing, and electricity generation alongside the ongoing growth of renewable energy.

While market participation broadened modestly beyond the largest technology companies, performance remained concentrated among a relatively small group of semiconductor and memory companies tied to AI infrastructure. Meanwhile, weakness across much of the software sector created a meaningful headwind for many growth-oriented investors despite the broader market’s advance.

How are those themes reflected in the portfolio today?

We believe AI infrastructure and energy security will remain important investment themes, and our portfolio includes several companies we believe are well positioned to benefit from both.

Within AI, our focus has been on businesses providing the infrastructure that enables continued adoption. Electrical distribution and services company, Wesco is benefiting from investment in data centers and electric grid modernization, while Vertiv supplies the cooling and power systems needed for AI computing. We also remain optimistic about ARM Holdings, whose semiconductor architecture continues to play an increasingly important role in AI applications.

Within the Energy sector, we favor companies with high-quality assets and durable cash flows. Portfolio holding Phillips 66 combines refining, midstream, and marketing operations, while Texas Pacific Land provides unique exposure to activity in the Permian Basin through its extensive land holdings. We believe both companies are well positioned to benefit from the continued need for reliable energy production and infrastructure.

More broadly, these investments reflect our consistent approach of identifying high-quality mid-cap businesses with durable competitive advantages, strong free cash flow, and attractive long-term growth potential.

The Fund is now classified by Morningstar as a Mid-Cap Growth strategy. What excites you about the mid-cap opportunity set?

We believe today’s mid-cap market offers a compelling combination of attractive valuations and long-term growth potential. Compared with large-cap stocks, many mid-cap companies are trading at a meaningful valuation discount despite having established business models, strong competitive positions, and significant opportunities to expand market share. We believe this disconnect between valuations and business fundamentals creates an attractive environment for active stock selection.

For the Cromwell Tran Focus Fund, we seek high-quality, growth-oriented mid-cap companies with improving fundamentals, attractive valuations, and the ability to compound earnings and cash flow over the long term.