Virtus Zevenbergen Innovative Growth Stock Fund Q4 2025 Commentary

U.S. equities closed 2025 with three consecutive years of double-digit gains, marking the first such streak since the late 1990s tech boom, driven by robust corporate profits and sustained AI-driven market momentum. The Virtus Zevenbergen Innovative Growth Stock Fund underperformed in Q4 2025, posting a -2.74% return (Class I) compared to the Russell 3000 Growth Index’s 1.14% gain, reversing prior growth trends. Exact Sciences and Natera led portfolio gains in Q4, buoyed by strong diagnostics and genomic testing demand, offsetting broader market volatility and sector-specific headwinds. Axon Enterprise and MercadoLibre dragged performance, with Axon facing regulatory scrutiny over AI-powered policing tech and MercadoLibre grappling with Latin American economic instability. The commentary highlights AI’s outsized influence on equity markets, echoing late-1990s patterns but warning of potential valuation risks amid prolonged growth streaks.