The Mairs & Power Growth Fund (MPGFX), a mutual fund known for its strategic focus on growth stocks, has been navigating an evolving investment landscape shaped by regional characteristics and shifting market dynamics. Established with a mandate that favors companies across all sizes trading at reasonable valuations, the fund is notable for its specific geographic focus—requiring that a significant portion of its investments be in firms located in the upper Midwest, particularly around its management team’s home base in St. Paul, Minnesota. This regional inclination has historically steered the fund’s portfolio toward sectors such as industrials, financials, and healthcare.
As the financial markets continue to grapple with economic uncertainties, the fund’s management team, led by seasoned managers Andy Adams and Peter Johnson, has broadened its investment horizons. In a noticeable shift from past practices, a substantial allocation to technology stocks has emerged in recent years. Noteworthy investments include industry giants such as Nvidia, Microsoft, and Amazon.com, all strategically integrated into the fund’s holdings. This pivot toward tech is indicative of a larger trend within the investment community, where growth-oriented strategies increasingly prioritize technology as a critical growth driver.
However, the fund’s performance has faced challenges amidst a turbulent market. As of April 2023, Mairs & Power Growth reported a year-to-date decline of 7.5%, underperforming the S&P 500 Index, which fell by 5.1% during the same period. Over a 12-month trajectory, the fund’s modest gain of 5.0% is particularly concerning when juxtaposed against the broader market, reflecting a more profound struggle to keep pace with the index. This trend raises pertinent questions about the fund’s strategic direction and its capacity to adapt to the fast-changing financial landscape.
Despite the overall dip, the fund’s exposure to financial stocks has yielded notable successes. Companies within the financial sector, such as JPMorgan Chase, Fiserv, and Visa, have demonstrated robust performance, recording double-digit gains over the past year. This sector resilience has acted as a stabilizing force within the portfolio, mitigating some of the declines seen elsewhere.
Additionally, the fund has experienced positive contributions from diverse sectors, including significant gains in shares from Swiss pharmaceutical firm Roche Holdings and WEC Energy Group, a utility provider. Such performance highlights the importance of a diversified portfolio, allowing the fund to leverage stability across varying sectors during times of market volatility.
Currently, technology stocks represent a significant 34% of the Mairs & Power Growth Fund’s portfolio, a substantial increase from the previous modest exposure levels observed a decade ago. This strategic reallocation underscores a fundamental shift reflecting broader market sentiments, suggesting that the fund’s management is positioning itself to capitalize on the long-term growth potential inherent in technology.
Further decisions by the management team have included recent investments in Taiwan Semiconductor Manufacturing Company (TSMC), a leader in the semiconductor industry. The purchase was made at discounted prices during the latest market selloff, indicating a tactical response to market conditions that could bode well for future returns.
The changes taking place within the Mairs & Power Growth Fund provide valuable insights into the investment strategies employed by seasoned fund managers as they navigate both localized and broader economic trends. The fund, which holds a reputable place within the Kiplinger 25—a curated selection of no-load mutual funds known for their strong performance and reliability—remains a focal point for investors seeking growth opportunities.
As financial markets evolve and present both challenges and opportunities, the ongoing monitoring of the Mairs & Power Growth Fund will be essential. Investors and analysts alike will be keen to assess how the fund manages its allocations, particularly in sectors facing heightened scrutiny, such as technology, while also ensuring that its foundational strategy aligns with the changing market landscape. The implications of its strategic choices could have lasting impacts not only on the fund’s performance but also on the investment approaches of similar funds in the years to come.