The Touchstone Dynamic Large Cap Growth Fund demonstrated a remarkable performance in the final quarter of 2025, surpassing its benchmark, the Russell 1000 Growth Index. This achievement reflects the fund's strategic investment philosophy, emphasizing high-quality companies with substantial growth prospects and sound financial standing. The adaptive quantitative investment model, a cornerstone of the fund's approach, proved instrumental in navigating evolving market dynamics and securing impressive returns for investors.
Key to this success was the fund's adept management of its portfolio, making timely adjustments to capitalize on market opportunities while mitigating risks. This included favoring companies with strong long-term growth trajectories, focusing on cash flow and balance sheet strength, and making astute sector allocations. Such a disciplined and flexible strategy underscores the fund's commitment to delivering consistent outperformance in a competitive investment landscape.
Strategic Portfolio Adjustments and Market Outperformance
In the fourth quarter of 2025, the Touchstone Dynamic Large Cap Growth Fund exhibited superior performance against its benchmark, the Russell 1000 Growth Index. This outperformance was primarily attributable to the fund's strategic investment decisions, which prioritized companies demonstrating strong long-term growth potential. The fund’s adaptive quantitative investment model, designed to respond to changing market conditions, effectively identified and leveraged opportunities. By focusing on metrics like Cash Flow Value and Balance Sheet Value, the fund ensured a robust selection of companies. Furthermore, deliberate sector allocations, particularly in Pharmaceuticals & Biotech and Materials, significantly contributed to its strong returns. This proactive and analytical approach allowed the fund to capitalize on market movements and deliver compelling results to its investors.
The successful navigation of the market in Q4 2025 by the Touchstone Dynamic Large Cap Growth Fund highlights the efficacy of its dynamic investment strategy. The fund’s ability to outperform was not merely a result of broad market trends but a testament to its disciplined stock selection and tactical sector positioning. For instance, strong returns from Incyte Corp were noted, driven by effective management and appealing forward valuations. The fund also made strategic shifts, increasing its allocation to Financials due to strong management and growth prospects, while reducing exposure to Communication Services to avoid speculative assets lacking fundamental support. This agile and research-driven methodology underscores the fund's commitment to maximizing returns through intelligent portfolio construction and continuous market adaptation.
Investment Philosophy: Growth at a Reasonable Price
The Touchstone Dynamic Large Cap Growth Fund operates under an investment philosophy centered on identifying "Growth at a Reasonable Price" (GARP) opportunities. This approach is meticulously implemented through Los Angeles Capital's Dynamic Alpha Stock Selection Model®, which consistently guides the fund toward companies that combine robust growth prospects with sensible valuations. The model emphasizes investments in large-capitalization companies characterized by high-quality earnings and positive analyst revisions, signaling strong underlying business health and future potential. Furthermore, a key aspect of this strategy involves favoring companies that demonstrate a commitment to returning capital to shareholders through vigorous share repurchase programs, indicating financial strength and a management team focused on shareholder value.
Looking ahead to 2026, the fund's positioning remains firmly rooted in this GARP philosophy, as indicated by the Model's continued stance. This involves a diligent process of selecting U.S. equity securities of large-capitalization companies that not only exhibit significant growth but also maintain attractive valuations. The fund actively seeks out firms with sound financial fundamentals, robust balance sheets, and strong cash flow generation capabilities. By combining these rigorous quantitative criteria with an adaptive framework, the Touchstone Dynamic Large Cap Growth Fund aims to consistently uncover superior investment opportunities that offer both growth and value, thereby sustaining its objective of generating long-term capital appreciation for its investors.