Small cap value stocks outperformed large caps in Q4 2025. The Russell 2000 Value Index beat the S&P 500 and Russell 2000 Growth Index, driven by strong earnings and better-than-expected GDP data. Healthcare led gains, particularly pharmaceutical and biotechnology companies. However, the Northern Small Cap Value Fund underperformed its benchmark as highly volatile, low-profitability names rallied, a segment the fund deliberately underweights. The fund managers maintain their disciplined approach, focusing on reasonably priced, profitable small-cap stocks while avoiding lower-quality companies. This strategy prioritizes fundamental value over momentum-driven volatility in the small-cap space.
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