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Voya MidCap Opportunities Strategy Quarterly Commentary - 1Q26

Key Takeaways

Equity markets declined in 1Q26 as easing inflation momentum gave way to heightened geopolitical risk and policy uncertainty. Growth-oriented segments led the pullback, while value proved more resilient. Market participation narrowed, with sector performance becoming more mixed and energy emerging as a standout amid global supply concerns

For the quarter ended March 31, 2026, the Fund underperformed its benchmark, the Russell Mid Cap Growth Index (the Index) on a net asset value basis (NAV) basis, mainly due to unfavorable stock selection.

Equity markets are navigating a more complex macro environment, influenced by geopolitical risk, policy uncertainty, and evolving growth dynamics. Leadership is rotating toward more defensive and quality-oriented areas, reinforcing the importance of selective positioning and active risk management in a more volatile environment.

Actively managed mid-cap growth strategy that relies on fundamental research and analysis to identify companies exhibiting superior capital investment and core profitability with attractive risk-reward profiles.

Portfolio review

Heightened geopolitical risks and changing economic expectations pushed U.S. equity markets lower during the first quarter of 2026. Broad weakness in large cap technology and software stocks, linked to concerns around artificial intelligence disruption, weighed on performance. The S&P 500 declined by –4.33% on a total return basis, while the Nasdaq Composite fell by –7.11% on a price return basis. Investors shifted market leadership toward more defensive and value focused areas, allowing the energy, materials, and utilities sectors to outperform, while financials, consumer discretionary, and communication services lagged. Value stocks proved more resilient than growth stocks, and small cap stocks outpaced large caps as overall market participation narrowed. 

Despite the overall weakness, markets remained largely range bound for much of the quarter, with volatility occurring more beneath the surface than at the broad market level. AI continued to be a key theme, although investor sentiment became more selective as disruption concerns weighed on software and parts of large cap technology. While spending on AI infrastructure remained strong, investor attention shifted toward earnings visibility and return on investment, leading to wider differences in performance across the market. 

For the quarter, the Fund underperformed the Index on a NAV basis due largely to unfavorable stock selection. Stock selection within the health care, communication services, and consumer staples sectors detracted the most from performance. Alternatively, there was favorable stock selection within the information technology, consumer discretionary, and industrials sectors. 

Key detractors from performance included Quanta Services, Inc., ICON Plc., and Texas Pacific Land Corp. 

Not owning Quanta Services, Inc. (PWR) detracted from performance as shares rallied after strong earnings results, driven by increasing demand for AI-related infrastructure investment. 

Our position in ICON Plc. (ICLR) detracted from performance. Shares fell following the announcement of 4Q25 earnings delay amid investigation into accounting practices. 

Our positioning in Texas Pacific Land Corp. (TPL) detracted from performance. Shares rose early in the period following strong earnings results and the announcement of a partnership to develop AI data centers on company owned land. 

Key contributors to performance included Comfort Systems USA, Inc., TechnipFMC Plc., and Flutter Entertainment Plc. 

An overweight position in Comfort Systems USA, Inc. (FIX) contributed to performance, as the company delivered a strong earnings report, driven by robust demand tied to AI datacenter construction. 

A non-benchmark position in TechnipFMC Plc. (FTI) contributed to performance. The stock benefited from rising oil prices driven by heightened geopolitical tensions. 

Not owning Flutter Entertainment Plc. (FLUT) contributed to performance as shares declined following weaker than expected earnings, lowered guidance, and growing competition from prediction markets.

Current strategy and outlook

The U.S. economy entered 2026 in a strong position despite high interest rates and tighter financial conditions, as markets moved from expecting rate cuts to anticipating an extended period of steady policy. Consumer spending continued to support demand, while expectations for double-digit earnings growth led to shifts across sectors, especially in technology amid ongoing disruption from AI. Market leadership expanded beyond mega cap stocks, and although labor market conditions eased, broader data pointed to moderation rather than a clear downturn. 

Inflation trends and geopolitical events played a growing role in shaping interest rate expectations and asset performance. Ongoing inflation pressures and higher energy prices—linked to Middle East tensions involving Iran and disruptions near the Strait of Hormuz—supported a higher-for-longer interest rate environment. U.S. assets remained relatively strong, with the dollar posting its strongest quarterly gain since late 2024, defensive sectors and equal-weight equities showing resilience, and demand for safe-haven assets staying firm. Overall, the environment reflected high uncertainty alongside solid underlying economic fundamental factors

Holdings Detail

Companies mentioned in this report–percentage of portfolio investments, as of 03/31/26: Quanta Services, Inc. 0.00%, ICON Plc. 0.00%, Texas Pacific Land Corp. 0.26%, Comfort Systems USA, Inc. 2.99%, TechnipFMC Plc. 1.25% and Flutter Entertainment Plc. 0.00%; 0% indicates that the security is no longer in the portfolio. Portfolio holdings are subject to daily change.

Related Resources

Voya MidCap Opportunities Fund Fact Sheet

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The Russell Midcap Growth Index is an unmanaged index that measures the performance of those companies included in the Russell Midcap Index with relatively higher price-to-book ratios and higher forecasted growth values.

Index returns do not reflect fees, brokerage commissions, taxes or other expenses of investing. Investors cannot invest directly in an index.

All investing involves risks of fluctuating prices and the uncertainties of rates of return and yield inherent in investing. Foreign Investing does pose special risks including currency fluctuation, economic and political risks not found in investments that are solely domestic. Investing in stocks of Mid-Sized Companies may entail greater volatility and less liquidity than larger companies. The Fund may use Derivatives, such as options and futures, which can be illiquid, may disproportionately increase losses and have a potentially large impact on Fund performance. Other risks of the Fund include but are not limited to: Growth Investing Risks; Market Trends Risks; Other Investment Companies Risks; Price Volatility Risks; Inability to Sell Securities Risks; Securities Lending Risks; and Portfolio Turnover Risks. Investors should consult the Fund's Prospectus and Statement of Additional Information for a more detailed discussion of the Fund's risks.

The strategy is available as a mutual fund or variable portfolio. The mutual fund may be available to you as part of your employer sponsored retirement plan. There may be additional plan level fees resulting in personal performance that varies from stated performance. Please call your benefits office for more information.

Variable annuities and group annuities are long-term investments designed for retirement purposes. If withdrawals are taken prior to age 59½, an IRS 10% premature distribution penalty tax may apply. Money taken from the annuity will be taxed as ordinary income in the year the money is distributed. An annuity does not provide any additional tax deferral benefit, as tax deferral is provided by the plan. Annuities may be subject to additional fees and expenses to which other tax-qualified funding vehicles may not be subject. However, an annuity does provide other features and benefits, such as lifetime income payments and death benefits, which may be valuable to you. All guarantees are based on the financial strength and claims paying ability of the issuing insurance company, who is solely responsible for all obligations under its policies. Insurance products, annuities and funding agreements issued by Voya Retirement Insurance and Annuity Company (“VRIAC”), One Orange Way, Windsor, CT 06095, which is solely responsible for meeting its obligations. Plan administrative services provided by VRIAC or Voya Institutional Plan Services, LLC (“VIPS”). Securities distributed by or offered through Voya Financial Partners, LLC (“VFP”) (member SIPC) or other broker-dealers with which it has a selling agreement. Only Voya Retirement Insurance and Annuity Company is admitted and can issue products in the state of New York.

This commentary has been prepared by Voya Investment Management for informational purposes. Nothing contained herein should be construed as (i) an offer to sell or solicitation of an offer to buy any security or (ii) a recommendation as to the advisability of investing in, purchasing or selling any security. Any opinions expressed herein reflect our judgment and are subject to change. Certain of the statements contained herein are statements of future expectations and other forward-looking statements that are based on management’s current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Actual results, performance or events may differ materially from those in such statements due to, without limitation, (1) general economic conditions, (2) performance of financial markets, (3) interest rate levels, (4) increasing levels of loan defaults (5) changes in laws and regulations and (6) changes in the policies of governments and/or regulatory authorities.

The opinions, views and information expressed in this commentary regarding holdings are subject to change without notice. The information provided regarding holdings is not a recommendation to buy or sell any security. Portfolio holdings are fluid and are subject to daily change based on market conditions and other factors. Past Performance does not guarantee future results.

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