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 in 2025, and what to look for in 2026. This was recorded on January 27, 2026.
Executive Summary
The Mairs & Power Growth Fund (MPGFX) returned 10.54% in 2025, an absolute gain but one that significantly underperformed both its benchmark and peer group. While long‑term results continue to keep pace with the benchmarks, 2025 underscored the Fund’s inherent characteristics: a concentrated portfolio, a disciplined valuation framework, and a philosophy that can lag in narrow, momentum‑driven markets.
The investment landscape in 2025 was defined by artificial intelligence‑driven market concentration, elevated valuations in a handful of mega‑cap growth stocks, and late‑year improvements in inflation and interest‑rate expectations. While the S&P 500 benchmark benefited significantly from a narrow set of high‑valuation AI leaders, the Fund’s valuation discipline and focus on fundamentals meant avoiding several of the most expensive names, which caused relative performance headwinds.
The Fund intentionally consists of a concentrated portfolio of 40–50 holdings, ensuring that stock selection drives results. This positioning magnified the impact of a few large detractors in 2025, even as many core long‑term holdings maintained above-average underlying fundamentals.
Sector Performance
Sector allocation provided a modest positive contribution, driven primarily by underweights in several underperforming sectors including Consumer Discretionary, Consumer Staples, Energy, and Real Estate.
Stock Selection
As mentioned previously, stock selection was the primary source of 2025 underperformance. Two long‑term holdings, UnitedHealth Group (UNH) and Fiserv (FI), were the most notable detractors due to self‑inflicted operational challenges and leadership transitions. Despite short‑term missteps, both remain sizable long‑term contributors since initial purchase.
Other detractors included Hormel (HRL), Bio‑Techne (TECH), and Motorola Solutions (MSI), while contributions came from Microsoft (MSFT), NVIDIA (NVDA), JPMorgan & Chase (JPM), nVent (NVT), and Roche (RHHBY).
Portfolio Activity
The Fund added Zoetis (ZTS) and Intuitive Surgical (ISRG) during the fourth quarter. Both companies represent long‑term growth opportunities supported by attractive valuations and increasing integration of AI within product development and innovation cycles.
Looking Ahead
The Fund managers remain confident that AI will reshape broad swaths of the economy, though the market’s early‑cycle exuberance warrants caution. The Fund is selectively investing in companies able to harness AI to improve innovation, efficiency, and profitability, while steering clear of businesses more vulnerable to structural unemployment risks stemming from rapid automation or names trading at inflated valuations.
While 2025’s underperformance is disappointing in the short term, it does not alter the team’s perspective or process. The Fund will continue to seek out companies with durable competitive advantages trading at attractive valuations led by management teams with track records of strategic execution.
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.
Foreside Fund Services, LLC. is the Distributor for the Mairs & Power Funds
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.
Scott Howard is a registered representative of Foreside Fund Services, LLC.
Pete Slattery 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.