Behind the Numbers: Unpacking Wasatch Core Growth's Q3 2025 Journey

Ah, the third quarter of 2025. For many, it felt like a bit of a mixed bag, didn’t it? And, in truth, for the Wasatch Core Growth Fund, those three months proved to be quite the navigating challenge. While the fund certainly held its own in some respects, it did, admittedly, find itself lagging behind its primary benchmark, the Russell 2000 Growth Index, for this particular stretch. Not a disaster, by any stretch, but certainly a period that warrants a closer look, wouldn’t you agree?

You see, the broader market was really wrestling with a rather potent cocktail of factors. Inflation, still a persistent little devil, continued to make its presence felt, leading, naturally, to those ever-present whispers—and sometimes shouts—about the Federal Reserve’s next moves on interest rates. Higher rates, of course, tend to cast a bit of a shadow on growth-oriented companies, especially those smaller, more dynamic ones that make up a significant chunk of the Wasatch Core Growth portfolio. It’s a classic tug-of-war, really, between immediate economic pressures and long-term potential.

So, what really drove this differential? Well, a few things, actually. The fund’s emphasis on certain smaller, innovative growth companies, while a source of strength over the long haul, occasionally means it zigging when the broader market zags, especially in choppier waters. Some specific sectors, for example, felt the squeeze more acutely than others, impacting individual holdings that had previously been stellar performers. It’s never just one thing, is it? It’s a confluence of macro trends meeting micro-company realities, creating a unique snapshot for the quarter.

But let’s not get too bogged down in the short-term undulations. Fund management, for their part, maintains a steady hand, a resolute focus on their core philosophy. They’re not chasing fads, nor are they abandoning their conviction in high-quality, sustainably growing businesses, even when the market’s spotlight momentarily shifts elsewhere. For them, it’s about identifying companies with strong competitive advantages, robust balance sheets, and visionary leadership – the kind of qualities that, in their view, tend to weather storms and thrive over the long run.

And, honestly, this long-term perspective is crucial, particularly when you’re dealing with the often-volatile world of small-cap growth. There will always be quarters, perhaps even years, where the immediate headwinds are strong. But the strategy here, one could say, is built on the belief that these businesses, given time and the right economic conditions, will ultimately deliver. So, as we turn the page to Q4, the Wasatch team isn't necessarily changing course, but rather doubling down on their research and belief in their chosen companies, always searching for those overlooked gems with true staying power. It’s an ongoing story, really, with each quarter adding another chapter to the narrative of growth and resilience.