Conestoga SMid Cap Composite Reports Q4 2025 Performance Decline

The Conestoga SMid Cap Composite experienced a decline in performance during the fourth quarter of 2025, returning -2.71% after fees. This result fell short of the benchmark, the Russell 2500 Growth Index, which posted a positive return of 0.33%. The quarter was marked by volatility in relative performance, influenced significantly by stock selection within specific sectors.

Stock selection in the **Industrials** and **Real Estate** sectors emerged as major factors contributing to the underperformance of the Conestoga SMid Cap Composite. The composite’s holdings in these areas did not perform as well as anticipated, leading to adverse impacts on overall returns. Additionally, the composite’s underweight position in the **biotechnology industry**, known for its high volatility, also detracted from relative performance.

Detailed Performance Analysis

Throughout the quarter, the Conestoga SMid Cap Composite faced challenges primarily tied to sector allocations and stock selection. The **Industrials sector** was particularly troublesome, with several holdings underperforming against their peers. This trend was mirrored in the **Real Estate** sector, where market fluctuations affected many stocks adversely.

Moreover, the decision to maintain an underweight position in the biotechnology sector, while prudent in certain contexts, proved detrimental in the face of the sector’s market movements. The composite’s strategy, which typically emphasizes stability and growth, did not align with the heightened volatility present in biotechnology stocks during this period.

Investors looking at the Conestoga SMid Cap Composite’s performance in Q4 2025 may consider these sector influences when evaluating the composite’s strategy and potential adjustments moving forward. The mixed performance in key sectors underscores the importance of careful stock selection and sector weightings in achieving desired investment outcomes.

As the market evolves, the Conestoga team will likely reassess its approach to sector allocations and stock picks, aiming to improve future performance and align more closely with benchmark indices.