Growth equities rebounded strongly during the second quarter as investor sentiment improved and concerns surrounding economic growth began to stabilize. Markets were supported by resilient corporate earnings, continued strength in artificial intelligence-related spending, and growing confidence that the U.S. economy could withstand ongoing inflationary pressures. Semiconductor and AI infrastructure companies led performance, driving a broad recovery across growth-oriented sectors. While geopolitical tensions and inflation concerns remained present, investors became increasingly focused on long-term earnings opportunities and technological innovation. As a result, leadership shifted back toward growth sectors, particularly Information Technology and Communication Services, while more defensive areas such as Energy, Utilities, and Consumer Staples lagged the broader market. The Commerce Mid Cap Growth Fund’s return of 10.95% underperformed the Russell Mid Cap Growth Index’s return of 14.55%.
Stock selection detracted from the Fund’s performance for the quarter. The Fund’s strongest performers were NetApp, Inc. (1.82%), SharkNinja, Inc. (1.52%), and Rockwell Automation, Inc. (1.44%), returning 51.91%, 43.79%, and 38.39%, respectively. The Fund’s top detractors were Planet Fitness, Inc. (0.00%), Circle Internet Group, Inc. (0.00%), and PTC Inc. (0.83%), returning -32.45%, -20.39%, and -20.27%, respectively.
The Fund’s sector allocation added to performance for the quarter. The Fund’s 0.96% overweight in the Information Technology sector added to performance as it was a stronger sector, returning 36.48%. The index had a 17.35% weight in the Information Technology sector. However, the Fund’s 1.02% overweight in the Consumer Staples sector detracted from performance as it was a weaker sector, returning 6.44%. The index had a 1.58% weight in the Consumer Staples sector.
