In the final quarter of 2025, the Institutional Class shares of the Columbia Small Cap Growth Fund demonstrated a notable performance, achieving a return of 4.33%. This figure surpassed its benchmark, the Russell 2000 Growth Index, which saw a return of 1.22% over the same period. The fund's strategic investments in the information technology sector were a primary driver of its positive contributions to relative performance. Conversely, holdings within the healthcare sector presented challenges, weighing down the overall relative returns. Looking ahead to 2026, the market environment appears conducive for the fund to continue its strategy of pinpointing leading growth prospects within the small-cap domain.

During the fourth quarter, the U.S. small-cap equity market, as measured by the Russell 2000 Index, experienced a gain of 2.19%. In comparison, large-cap U.S. equities, tracked by the Russell 1000 Index, recorded a slightly higher return of 2.41% over the same timeframe. This period highlights the dynamic nature of both segments of the equity market, with small-caps showing solid, albeit slightly lower, growth than their large-cap counterparts.

The Columbia Small Cap Growth Fund's success in the fourth quarter was significantly bolstered by its strategic allocations within the information technology sector. These investments proved to be particularly fruitful, contributing positively to the fund's outperformance against its benchmark. However, the fund encountered headwinds from its positions in the healthcare sector, which somewhat tempered the overall gains. The management team's focus remains on leveraging robust analysis to navigate sector-specific challenges and capitalize on promising growth trajectories.

As the fund transitions into 2026, management maintains a positive outlook, anticipating a supportive environment for its investment approach. The core strategy revolves around identifying and investing in companies that exhibit strong growth potential within the small-cap universe. This involves a diligent process of research and selection aimed at uncovering innovators with the capacity for sustained earnings per share growth and high returns on investment, particularly in expanding markets.

The fund's forward-looking strategy emphasizes identifying innovative companies that can thrive in evolving markets. The investment team rigorously selects firms that not only earn above their cost of capital but also demonstrate consistent earnings per share growth. This meticulous stock-picking approach is central to the fund’s objective of delivering value to its investors by focusing on high-quality growth opportunities in the small-cap segment.

The investment landscape for small-cap growth stocks in 2026 is viewed favorably, supported by several macroeconomic factors. Anticipated continued low inflation, along with sustained employment levels, are expected to foster a stable economic environment. Furthermore, the positive impact of supportive fiscal policies and the potential productivity enhancements stemming from advancements in artificial intelligence are projected to create fertile ground for growth-oriented small-cap companies.

In summary, the Columbia Small Cap Growth Fund's Q4 2025 performance underscored its ability to generate significant returns, predominantly driven by strong selections in the technology sector. Despite some drag from healthcare holdings, the fund's overall strategy proved effective in outperforming its benchmark. With a confident outlook for 2026, bolstered by favorable macroeconomic conditions and a continued commitment to identifying high-potential growth opportunities, the fund is well-positioned for future success.