In this Fund update, Andrew Adams, chief investment officer and lead manager of the Mairs & Power Growth Fund, and Peter Johnson, co-manager, discuss the Fund’s returns, drivers of performance so far in 2025, and what to look for the rest of the year. This was recorded on July 23, 2025.
Executive Summary
The Mairs & Power Growth Fund (MPGFX) posted a year-to-date return of 1.98% through June 30, 2025, trailing both the S&P 500 TR Index (6.20%) and the Morningstar Large Blend peer group (5.73%). This underperformance reflects a continuation of the Fund’s historical tendency to lag in strong bull markets, particularly when its long-term, regionally focused investment style is out of favor.
The first half of 2025 was marked by volatility. Markets were initially shaken by tariff threats, but rebounded as trade policy deadlines were postponed, allowing for renegotiations and enabling portfolio companies to implement price increases to offset rising input costs. The Fund’s emphasis on companies with pricing power helped mitigate the impact of inflationary pressures.
Technology stocks led the market recovery in the second quarter, driven by renewed enthusiasm around artificial intelligence (AI). The Fund benefited from outperformance in mega-cap Information Technology holdings, particularly Microsoft (MSFT) and NVIDIA (NVDA), which continue to capitalize on AI-driven productivity gains. A strategic pullback earlier in the year also allowed the team to initiate a position in Meta Platforms (META), whose global reach and AI-enhanced advertising capabilities have already delivered promising returns.
Sector Performance
Sector allocation contributed positively to Fund performance thus far in 2025. Overweights in Industrials and Financials, along with underweights in Consumer Cyclicals and zero exposure to Energy, supported relative performance. Conversely, holdings in Communications Services, Consumer Staples, Health Care, and Materials detracted.
Stock Selection
Stock selection played a pivotal role in the Fund's underperformance year-to-date. UnitedHealth Group (UNH) was the largest detractor, impacted by pricing missteps in its Medicare Advantage business. Despite this, the team increased its position, citing confidence in returning CEO Steve Hemsley’s efforts to restore operational discipline. Other detractors included Workiva (WK), Bio-Techne (TECH), and Fiserv (FI). On the positive side, JPMorgan & Chase (JPM), Roche (RHHBY), Microsoft, and NVIDIA were notable contributors.
Looking Ahead
Looking ahead, the investment team remains focused on the transformative potential of AI across industries. From logistics and healthcare to software development, companies embracing AI are realizing meaningful efficiency gains. Relatedly, the Fund added IDACORP (IDA) during the period, a utility poised to benefit from the energy demands of AI data centers. Attendance at industry events like Automate 2025, a recent robotics conference in Detroit, further reinforced the team’s conviction in AI’s impact on industrial automation.
Despite short-term underperformance, the investment managers remain committed to its long-term philosophy: investing in high-quality companies with above-average fundamentals, regional ties, and the potential to grow into market leaders. In addition, the Fund continues to seek out smaller, under-the-radar businesses that can evolve into future portfolio cornerstones.
Disclosures
Top 10 Fund Holdings (subject to change)
Expense ratio: 0.62%
S&P 500 TR Index is an unmanaged index of 500 common stocks that is generally considered representative of the U.S. stock market.
Morningstar large-blend portfolio are fairly representative of the overall U.S. stock marketing in size, growth rates, and price. Stocks in the to 70% of the capitalization of the U.S equity market are defined as large-cap. The blend style is assigned to portfolios where neither growth nor value characteristics predominate. These portfolios tend to invest across the spectrum of U.S. industries, and owing to their broad exposure, the portfolios’ returns are often similar to those of the S&P 500 Index.
The statements and opinions expressed are those of the speakers and are as of the date of this call. All information is historical and not indicative of future results and subject to change. Characteristics and other statistical measures refer to underlying stocks in the portfolio and do not represent or predict the performance of any fund.
Scott Howard is a registered representative of Foreside Fund Services, LLC.
All investments have risks. The Growth Fund is designed for long-term investors. Equity investments are subject to market fluctuations and the Fund’s share price can fall because of weakness in the broad market, a particular industry, or specific holdings. Investments in small and midcap companies generally are more volatile. International investing risks include among others political, social or economic instability, difficulty in predicting international trade patterns, taxation and foreign trading practices, and greater fluctuations in price than U.S. corporations.
Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted. Performance as of the most recent month end is available by calling 800-304-7404. Click Here for standardized performance.
The mention of specific securities is not intended as a recommendation or an offer of a particular security, nor is it intended to be a solicitation for the purchase or sale of any security.