Touchstone Mid Cap Growth Fund — Q3 2025 Commentary & Outlook

In Q3 2025 the Touchstone Mid Cap Growth Fund navigated a mixed market backdrop, balancing the opportunities in growth-oriented mid-cap stocks against valuation and macroeconomic headwinds. Equity markets showed a bifurcated leadership: pockets of technology and software continued to benefit from strong secular trends, while more cyclical mid-cap companies faced greater sensitivity to economic data and rate expectations.

Portfolio performance during the quarter was driven primarily by active stock selection. Gains concentrated in select software and healthcare names reflected earnings momentum and durable revenue growth. Conversely, exposure to economically sensitive industrials and certain consumer-discretionary positions weighed on relative returns as investors rotated toward higher-quality growth and defensive earnings profiles.

The team maintained a disciplined approach to valuation and position sizing. Winners were trimmed to lock in gains and reduce concentration risk, while the Fund added to franchises with clear product differentiation and recurring revenue characteristics. Risk management remained a priority: the Fund avoided speculative names lacking consistent cash flows and emphasized businesses with scalable margins and durable competitive advantages.

From a sector perspective, an overweight to information technology and selective healthcare allocations contributed positively, while modest exposure to materials and industrials detracted. The portfolio’s quality tilt—favoring companies with improving free-cash-flow trajectories—helped mitigate volatility as market leadership narrowed.

Looking ahead, the Fund’s strategy emphasizes selectivity. Management expects a continued split between high-growth, structurally advantaged companies and cyclical mid-cap firms that remain sensitive to macro shifts. The team will prioritize companies with predictable growth, strong balance sheets, and attractive risk-adjusted return prospects, while remaining ready to capitalize on dislocations if valuations reset in compelling areas.

In sum, Touchstone’s mid-cap growth approach through Q3 combined active security selection, disciplined valuation checks, and pragmatic risk controls. The Fund remains positioned to capture durable growth opportunities while limiting exposure to highly cyclical or valuation-risky names as market conditions evolve.