Voya Small Cap Growth Fund Quarterly Commentary - 4Q25

• Equity markets advanced in 4Q25, buoyed by moderating inflation and robust earnings. Technology remained dominant, fueled by accelerating artificial intelligence (AI) adoption, while industrials benefited from strong capital expenditure trends, although energy softened after early strength. Broader market participation persisted, with small caps and cyclicals contributing.
• For the quarter ended December 31, 2025, the Fund outperformed the Russell 2000 Growth Index (the Index) on a net asset value (NAV) basis, due to stock selection. Positive stock selection in the technology, industrials, and consumer discretionary sectors were the leading contributors to outperformance. An overall negative allocation effect modestly detracted from performance for the period.
• Looking ahead, investors face geopolitical risks and policy uncertainty. Market leadership is widening beyond mega-cap growth, supported by AI-driven innovation and sustained corporate capital expenditure. Opportunities are emerging in defensives and rate-sensitive sectors, reinforcing the need for nimble positioning amid evolving macro conditions.

For the quarter ended December 31, 2025, the Fund outperformed the Index on a NAV basis, due to stock selection. Positive stock selection in the technology, industrials, and consumer discretionary sectors were the leading contributors to outperformance. An overall negative allocation effect modestly detracted from performance for the period. 

Top individual contributors included Tower Semiconductor Ltd., Lumentum Holdings, Inc., and FormFactor, Inc.

Tower Semiconductor Ltd. (TSEM) is a specialty manufacturer of customized analog semiconductors used in diverse industries including automotive, medical, consumer, and industrial markets. TSEM’s 80% share of the silicon photonics market used to drive optical transmission of AI data provides the company the ability to generate healthy top line growth with expanding earnings before interest, tax, depreciation and amortization (EBITDA) margins. The company’s solid balance sheet and history of developing profitable strategic partnerships make the stock a solid holding with a meaningful weight in our portfolio. However, we are mindful of the valuation expansion and have trimmed the position following significant price appreciation. 

Lumentum Holdings, Inc. (LITE), a provider of optical and photonic products utilized in cloud, networking, and industrial applications, saw its stock price rise by over 125% during the fourth quarter and was on our list of top-performers for the third quarter in a row. LITE’s Cloud Light data center unit, which supports technologies critical for AI and cloud infrastructure, continued to grow and LITE exceeded company guidance. We continue to hold the stock and believe LITE is well positioned for continued near and mid-term growth from solid demand but considering the substantial stock price move, we have trimmed the position several times. 

FormFactor, Inc. (FORM), a semiconductor testing and measurement company, was a contributor for the quarter. In late October, FORM solidly beat 3Q25 earnings and issued upbeat guidance for 4Q25 and fiscal year 2026, sighting strong demand and driving gross margins over 45%. We took this opportunity to take profits during the quarter but continue to hold the name and like the long-term prospects of the company. 

Top individual detractors to performance included e.l.f. Beauty, Inc., Celsius Holdings, Inc., and Western Alliance Bancorp. 

e.l.f. Beauty, Inc. (ELF), a cosmetics and skincare products company, was the top detractor for the quarter. Although ELF has largely offset tariff exposure to China with price increases, initial FY2026 guidance was disappointing given weaker contribution from the rhode acquisition and organic growth from e.l.f. brands. After the stock sold off dramatically, we added slightly to the position but are monitoring the competitive landscape, which has become marginally more aggressive. 

Celsius Holdings, Inc. (CELH), a maker of energy drinks, underperformed the quarter. Following a period of accelerating revenue growth inclusive of the Alani Nu acquisition, CELH guided below 4Q25 expectations due to transition issues related to a distributor change to Pepsi for Alani Nu. We believe the disruption is temporary and although competition is always a concern in the energy drink category, we are maintaining our current position given the strong 2026 revenue growth expectations. 

Western Alliance Bancorp (WAL) is a regional bank focused on commercial banking, lending and deposit services for businesses and individuals. Despite an earnings per share (EPS) beat and better-than-expected loan growth and expense control, shares lagged on two distinct credit events which occurred earlier this fall. Importantly, subsequent disclosure by the company implies little to no expectation for material losses nor any systemic credit issues in their broader portfolio. We trimmed our position slightly amidst poor investor sentiment but retain a meaningful overweight into what we expect should be a constructive year for loan growth, stable to improving economic conditions, and upside from any improvement in the housing market.

2025 proved to be a challenging year for the majority of small cap managers, with the average manager underperforming the Russell 2000 Growth benchmark, according to Morningstar. The Voya Small Cap Growth Strategy was able to navigate this environment, relying on experience, recognizing several market themes, adjusting the portfolio accordingly within the context of a proven philosophy and process and ultimately outperforming the benchmark. 

In addition to the generational AI-driven capital expenditure cycle, several policy drivers were at play including immigration reform (consumer and labor markets), the Department of Government Efficiency (DOGE) (government spending), Fed rate policy (cyclicals and small caps), and the constantly changing tariff backdrop (foreign sourced input costs). This past year was certainly one that will be remembered for its complexity and challenges.

As we look toward 2026, we foresee a positive and long awaited set up for the small cap growth asset class. A combination of accelerating earnings growth within small caps, an attractive valuation discount relative to large cap growth and a doveish Fed, all bode well for small caps. We are mindful of positions in the portfolio that saw significant price appreciation and valuation expansion in the prior year and risk versus reward has changed. The narrowness of market leadership appears to be broadening away from the high beta and momentum names that fueled 2025 to include areas of the market previously forgotten. Our team has been reducing exposure to AI related stocks and finding opportunity in the underappreciated healthcare sector as well as cyclical names in the industrial sector that can provide substantial “earnings torque” in a lower rate environment and are currently trading within an attractive valuation bandwidth. 

We are excited about the year ahead and appreciate the confidence you have in our team, philosophy, and process, that has enabled us to outperform our benchmark in 12 of the last 13 years. We will continue to strive for consistency and measurable risk adjusted performance and know that we are always available.

Companies mentioned in this report—percentage of portfolio investments, as of 12/31/25: Tower Semiconductor Ltd. 1.88%, Lumentum Holdings, Inc. 1.15%, FormFactor, Inc. 1.10%, e.l.f. Beauty, Inc. 1.03%, Celsius Holdings, Inc. 1.49%, and Western Alliance Bancorp. 1.31%; 0% indicates that the security is no longer in the Fund. Portfolio holdings are subject to daily change.