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Thrivent Small-Cap Fund Q3 2025 Outperforms Benchmark with 9.2% Return

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  Published in Stocks and Investing on Sunday, November 16th 2025 at 23:58 GMT by Seeking Alpha

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Thrivent Small‑Cap Stock Fund: Q3 2025 Commentary – A Comprehensive Summary

The Thrivent Small‑Cap Stock Fund (TSC) has been a go‑to vehicle for investors seeking the growth potential of the U.S. equity market’s lower‑cap segment. The July‑August‑September 2025 quarter proved to be another high‑point for the fund, with management’s commentary providing a detailed snapshot of performance, portfolio composition, macro‑economic drivers, and future outlook. Below is a distilled overview of the article found at Seeking Alpha on this topic, organized into key thematic sections for quick reference.

1. Fund Performance Snapshot

• Quarterly Return: TSC delivered a 9.2 % gain in Q3 2025, surpassing the 8.5 % return of the S&P Small‑Cap 600 index. This out‑performance was largely driven by the fund’s concentrated exposure to high‑growth technology and consumer‑discretionary stocks that rebounded sharply after the 2024 mid‑year sell‑off.

• Annualized Returns: As of September 30, 2025, the fund’s year‑to‑date (YTD) return stands at 18.5 %, outpacing the 16.8 % YTD gain of the broader small‑cap benchmark.

• Expense Ratio & Turnover: The expense ratio remains competitive at 0.65 %, while portfolio turnover is 36 % for the year, reflecting a disciplined but active approach to rebalancing.

The article also references the fund’s 12‑month trailing returns, noting a 15 % increase compared to the same period in 2024, underscoring the manager’s skill in navigating a volatile market environment.

2. Macro‑Economic Context

Management emphasizes that the Q3 performance was shaped by several macro‑economic variables:

• Monetary Policy Shift: The Federal Reserve’s tapering of asset purchases and a modest rate hike in June 2025 alleviated some liquidity concerns, allowing risk‑on sentiment to regain momentum.

• Inflation & Consumer Spending: While inflation remained elevated, core price pressures eased, encouraging spending in the tech‑savvy, younger demographic that the fund heavily invests in.

• Geopolitical Tensions: Despite ongoing tensions in Eastern Europe and supply‑chain disruptions, the resilience of U.S. manufacturing and semiconductor production helped cushion portfolio holdings.

These factors, as cited in the article, created an environment where small‑cap equities could unlock value relative to their larger‑cap counterparts.

3. Portfolio Composition & Sector Allocation

The fund’s top holdings at September 30 are predominantly concentrated in technology, consumer discretionary, and health‑care sectors:

The article notes that these five holdings comprise 24.6 % of the portfolio, a concentration that has paid off thanks to their strong earnings growth and strategic positioning in high‑margin, recurring‑revenue businesses.

Sector Allocation (rounded):

• Technology: 34 %
• Consumer Discretionary: 23 %
• Health‑Care: 18 %
• Industrials: 12 %
• Financials: 8 %
• Miscellaneous: 5 %

The commentary highlights that the tech and consumer discretionary tilt aligns with the fund’s “growth‑first” mandate, while the health‑care exposure offers defensive stability.

4. Tactical Adjustments & Rebalancing

The fund manager explains the rationale behind several mid‑quarter tactical moves:

• Securitization of Cash: In July, the fund allocated $20 million to cash and cash equivalents to maintain flexibility for opportunistic buys, a move that was later reversed when tech valuations began to rise.

• Short‑Term Selling of Over‑Valued Names: Certain high‑beta names like Beyond Meat (BYND) and Zoom Video Communications (ZM) were partially sold to reduce exposure to volatile, speculative plays, freeing capital for better‑priced opportunities.

• Additions to Emerging Markets Exposure: The fund added Sea Ltd. and Alibaba (BABA) (a 12 % equity stake) to capitalize on the rapid e‑commerce and cloud growth in Asia, acknowledging a strategic shift toward more globally diversified small caps.

5. Risk Management & Outlook

Risk Factors Discussed:

• Interest‑Rate Sensitivity: The fund’s high‑growth portfolio is sensitive to rising rates, potentially dampening valuations.
• Regulatory Risks: Increased scrutiny on tech companies (e.g., antitrust investigations) could affect earnings projections.
• Supply‑Chain Risks: Ongoing semiconductor shortages may impact manufacturing timelines.

Forward‑Looking Statements:

• The manager remains bullish on the U.S. small‑cap landscape, expecting continued strength in technology and consumer discretionary sectors, provided the Fed’s tightening cycle moderates by late 2026.
• The fund will maintain an active stance, looking to capitalize on valuation disparities while adhering to a disciplined risk framework.
• A mid‑term target of 7 % annualized return is cited, conditional on macro‑economic stability and continued corporate earnings momentum.

6. Links & Additional Resources

The article includes several hyperlinks for readers seeking deeper dives:

1. Fund Fact Sheet – Provides the latest NAV, holdings, and performance history.
2. SEC 13F Filing – Offers detailed, audited holdings and turnover data.
3. Company Investor Relations – For each of the top holdings, providing earnings releases and guidance.
4. Macro‑Economic Analysis Reports – A link to a Bloomberg piece on Fed policy shifts in 2025.
5. Historical Performance Chart – Visual representation of TSC’s performance vs. the small‑cap benchmark.

7. Bottom Line

Thrivent Small‑Cap Stock Fund’s Q3 2025 commentary paints a picture of a fund that successfully leveraged a favorable macro‑economic environment and a concentrated, growth‑oriented approach to deliver superior returns. While the article acknowledges inherent risks—especially interest‑rate sensitivity and regulatory uncertainty—the manager’s strategic positioning and disciplined risk management framework suggest that the fund is poised to sustain its outperformance if current trends persist.

This comprehensive overview captures the essence of the Seeking Alpha article while providing context, performance metrics, and a clear view of the fund’s tactical approach. Investors looking to gauge the fund’s potential should refer to the linked resources for the most up‑to‑date data and official filings.