Putnam U.S. Large Cap Growth Equity Concentrated
Mandate commentary
Q2 2026
Highlights
① The mandate returned 6.31%, outperforming the Russell 1000 Growth Index by 0.16 percentage points since inception, despite positive contributions from several information technology and industrials holdings.
② Earnings strength helped markets absorb uncertainty.
③ Valuations and rates make selectivity more important.
Mandate overview
The second quarter was characterized by continued strength in AI-related investments, with semiconductor companies leading performance as demand for AI infrastructure remained robust. Market leadership broadened beyond the initial AI beneficiaries, while several Magnificent Seven stocks underperformed the broader growth universe. Consumer resilience supported select discretionary businesses, and improving corporate fundamentals across a wider range of sectors expanded the opportunity set for growth investors.
Stock selection was the primary driver of relative underperformance, while sector-allocation effects had a limited impact. Holdings in information technology, industrials and consumer discretionary were among the mandate’s stronger performers, while selections within communication services detracted.
Mandate: Putnam US Large Cap Growth Concentrated Stock Review
Performance contributors
Lam Research was among the mandate’s top contributors to relative performance. The overweight position benefited from continued strength in semiconductor-related investments, as demand for AI infrastructure remained robust.
Advanced Micro Devices also contributed positively to relative performance. The mandate’s overweight position benefited, as semiconductor companies participated in the quarter’s strong AI-related market leadership.
Performance detractors
The portfolio’s lack of exposure to KLA detracted from relative performance, as the information technology company performed strongly during the quarter.
The portfolio’s lack of exposure to Palo Alto Networks also weighed on relative performance, as the information technology company performed strongly during the quarter.
Total gross returns:
Total return (USD) | QTD | YTD | 1YR | 3YR | 5YR | SINCE INC. (FEB. 18, 2025) |
PUTNAM U.S. LARGE CAP GROWTH EQUITY CONCENTRATED | 6.31
|
Mandate repositioning
During the quarter, the strategy added new positions in Micron Technology, Corning, Coherent, Snowflake, Western Digital and Marvell Technology, all within information technology.
The mandate is also focused on embedded intelligence, a theme involving companies that integrate artificial intelligence and advanced analytics into their products, services and business processes. This theme provides opportunities across areas such as industrial automation, health care, transportation, logistics and heavy equipment, where these technologies can improve productivity, automation and decision-making.
Information technology remains the mandate’s largest absolute sector allocation, although it is also the largest underweight relative to the benchmark, followed by industrials. Active sector weights remain within approximately five percentage points of the benchmark. The mandate has no exposure to energy, real estate or utilities, while more than 95% remains invested in U.S.-listed securities.
The mandate remains focused on companies with high and long-duration growth, high or improving capital returns and an ownership culture. Portfolio construction continues to be driven by fundamental, bottom-up security analysis, with sector active weights maintained relatively close to the benchmark to limit unintended factor risks and emphasize stock-specific opportunities.
Market overview: earnings strength helped markets absorb uncertainty
The second quarter of 2026 reinforced the resilience of financial markets. Investors faced conflict in the Middle East, commodity-price volatility, shifting interest-rate expectations and renewed inflation concerns, yet global equities continued to advance as corporate earnings and economic activity remained stronger than expected. The S&P 500 gained 14.9% in U.S.-dollar terms for the quarter, while the S&P/TSX Composite Index advanced 6.4%, supported by healthier earnings expectations and improving market breadth.
Canadian equities were led by a strong rebound in financials, as better-than-expected bank earnings, resilient credit quality and improved capital markets activity lifted sentiment. U.S. equities were supported by earnings strength rather than a simple risk-on rally, with Information Technology leading as AI infrastructure spending continued to anchor sentiment. International equities also contributed meaningfully, with emerging markets Korea and Taiwan benefitting from demand across the global technology supply chain.
Market outlook: valuations and rates make selectivity more important
Markets enter the second half of 2026 with fundamentals remaining broadly supportive, although elevated equity valuations leave less room for error. Earnings growth is likely to remain the key driver of returns, while inflation trends, central bank policy and interest-rate expectations will continue to shape market sentiment.
Across asset classes, diversification remains important. Canadian, international and emerging market equities offer exposure to distinct sources of growth, while higher yields in fixed income continue to provide a cushion against volatility. Selectivity remains key as investors balance opportunities against valuation and policy risks.
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This commentary may contain forward-looking information, which reflects our or third-party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and do not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of June 30, 2026. There should be no expectation that such information will in all circumstances be updated, supplemented or revised, whether as a result of new information, changing circumstances, future events or otherwise.
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