Madison Small Cap Fund underperforms benchmarks in Q1 2026. The fund returned 0.10% versus Russell 2000's 0.89% and Russell 2500's 2.04% gains. Despite lagging indices, the fund showed resilience with strong semiconductor holdings and strategic new positions. Viavi led performance following its Spirent acquisition, benefiting from accelerating AI data center demand. Value stocks significantly outperformed growth in small caps, with the Russell 2000 Value Index up 4.5% while growth declined nearly 3%. Software investments faced severe headwinds, with the iShares Software ETF down 25% for the quarter amid AI disruption concerns. The fund initiated positions in Workiva and Matador Resources at attractive valuations. Management believes market volatility from geopolitical tensions and AI uncertainty will create opportunities for patient investors going forward.
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