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Voya MidCap Opportunities Strategy Quarterly Commentary - 3Q25

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.

Key takeaways

  • Equity markets rebounded in the third quarter of 2025, recovering from April’s tariff-driven volatility and ending well above mid-year levels. Growth outperformed value, led by strong gains in technology and communication services, while consumer staples lagged, remaining the sole sector detractor, driven by early-quarter weakness. Easing inflation, selective rate cuts, and increased demand for safe-haven assets shaped cross-asset dynamics. Higher beta and deep value also participated meaningfully in the rally.
  • For the quarter ended September 30, 2025, the Fund outperformed its benchmark, the Russell Mid Cap Growth Index (the Index) on a net asset value (NAV) basis, mainly due to favorable stock selection.
  • As we enter the final stretch of the year, investors face persistent geopolitical tensions, policy uncertainty, and inflation risks. Market leadership is expanding beyond mega-cap stocks, creating opportunities in defensive and cyclical sectors. We aim to remain nimble amid ongoing macroeconomic and market uncertainty.

Portfolio review

U.S. equities posted significant gains for the quarter. The S&P 500 increased by 8.12%, while the Nasdaq Composite rose by 11.24%. Strong performance in technology and artificial intelligence-related stocks, along with a shift toward easing monetary policy drove the market higher. The technology and communication services sectors outperformed while consumer staples sector lagged. Small cap stocks beat large cap stocks, and growth outperformed value stocks.

During the quarter, U.S. corporate earnings significantly exceeded expectations and 3Q25 forecasts indicate continued strength. Meanwhile, the full impact from tariffs had not yet filtered through earnings, and trade negotiations were ongoing. In addition, the U.S. Federal Reserve cut rates in September following weaker labor data. The combination of strong earnings, ongoing trade talks, and the onset of a likely Fed easing cycle bolstered overall market sentiment during the quarter. 

For the quarter, the Fund outperformed the Index on a NAV basis due largely to favorable stock selection. Favorable stock selection within industrials, information technology, and communication services sectors contributed the most to performance. Conversely, stock selection in the health care, consumer discretionary, and financial sectors detracted from results. 

Key contributors to performance included Kratos Defense & Security Solutions, Inc., Comfort Systems USA, Inc., and AppLovin Corp.

A non-benchmark position in Kratos Defense & Security Solutions, Inc. (KTOS) contributed to performance. Shares rose following strong second-quarter earnings, with revenue up year over year (YoY). The stock continues to benefit from increased government spending on defense. 

An overweight position in Comfort Systems USA, Inc. (FIX) contributed to performance. Shares rose following a strong earnings report, with revenue and earnings per share (EPS) up YoY. The company benefited from robust demand for data center infrastructure. 

A non-benchmark position in AppLovin Corp. (APP) contributed to performance. Shares rose following a strong second-quarter earnings report and investor excitement around the upcoming launch of its web advertising platform. 

Key detractors from performance included MoonLake Immunotherapeutics, Tradeweb Markets, Inc., and Verisk Analytics, Inc. 

Our position in MoonLake Immunotherapeutics (MLTX) detracted from performance. Shares fell sharply following the disappointing results of the Phase 3 trial for sonelokimab, raising concerns about regulatory approval. 

An overweight position in Tradeweb Markets, Inc. (TW) detracted from performance. Shares declined as the stock remained under pressure as trading volumes remained low. 

An overweight position in Verisk Analytics, Inc. (VRSK) detracted from performance. Shares declined following the announcement of its acquisition of AccuLynx, with investor concerns around the financial risk of the purchase and lowered full-year guidance.

Current strategy and outlook

The U.S. economy navigates a complex landscape of interest rate changes, inflation concerns, and labor market dynamics. Due to the emerging signs of labor market softness, the Fed is expected to cut rates further. Solid economic data, strong corporate earnings, and easing monetary policy are boosting the attractiveness of U.S. assets, despite existing concerns.

Holdings Detail

Companies mentioned in this report–percentage of portfolio investments, as of 09/30/25: Kratos Defense & Security Solutions, Inc. 1.79%, Comfort Systems USA, Inc. 3.09%, AppLovin Corp. 0.55%, MoonLake Immunotherapeutics. 0.00%, Tradeweb Markets, Inc. 1.32% and Verisk Analytics, Inc. 2.26%; 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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