Conestoga Small Cap Fund Stumbles in Q1

Conestoga Small Cap Fund Stumbles in Q1
Conestoga Capital's Small Cap Composite portfolio declined 5.01% during the first quarter of 2026, underperforming its benchmark amid broader market headwinds. The underperformance was primarily driven by significant valuation compression in the software sector, which represents a meaningful allocation within the fund's holdings. Small-cap investors faced considerable challenges as growth stocks came under pressure from rising interest rate expectations and shifting market sentiment toward value equities. The fund's exposure to technology and software companies, while positioned for long-term growth, became a drag on near-term returns as investors rotated away from higher-multiple positions. This quarterly performance reflects the ongoing volatility in small-cap markets, where concentrated sector bets can amplify both gains and losses.