Allspring Mid Cap Growth Fund Q1 2026 Performance And Attribution

The fund outperformed the Russell Midcap Growth Index in the first quarter ended March 31, 2026. Vertiv Holdings benefited from sharply accelerating order-book growth and share gains in cooling, while Curtiss-Wright posted a strong quarter with steady backlog growth and remains a held name as a durable compounder. Overall tone is positive, driven by solid operating momentum at both portfolio companies.

Analysis

The market is likely underestimating how quickly cooling capacity becomes a bottleneck in AI infrastructure spending. If VRT is winning share in a structurally expanding market, the second-order effect is not just higher revenue visibility for one vendor, but a wider repricing of the entire electrical-thermal stack: adjacent power, switchgear, and data-center infrastructure names can benefit as customers pull forward capacity builds to secure lead times.

The key issue is durability of backlog conversion versus a simple order-book headline. If the current acceleration reflects genuine design wins, the bull case extends for multiple quarters because hyperscalers rarely unwind vendor qualification quickly; if it is mostly project timing, the stock can de-rate fast once bookings normalize. The most important medium-term risk is margin dilution from mix and accelerated fulfillment costs, especially if supply chain constraints force premium component sourcing or overtime labor.

Consensus still seems too focused on VRT as a pure AI beneficiary and not enough on the competitive damage to legacy thermal incumbents and slower industrial peers. That creates a potential multi-month winner/loser spread: VRT can keep taking share even without a dramatic change in end-demand, simply by being the preferred qualified partner during a capacity crunch. The contrarian risk is that expectations have moved ahead of fundamentals; once the market prices in sustained share gains, the next upside requires evidence that backlog converts into higher free cash flow, not just top-line beats.

For Curtiss-Wright, the better read is that investors are paying for resilience and backlog quality in a market that still rewards duration over cyclicality. That makes it a lower-beta compounder, but also means incremental upside may be capped unless industrial capital spending broadens further. If rates stay elevated and recession fears fade, the name can continue to work quietly; if growth weakens, it should hold up better than most cyclical industrials.

Key Decisions for Investors

• Stay long VRT into the next earnings cycle; use any 5-8% pullback to add, with a 3-6 month horizon and a stop if backlog growth decelerates for two consecutive quarters.
• Pair trade: long VRT / short a legacy cooling or data-center infrastructure peer with weaker order momentum; the thesis is share gain, not just sector beta, with potential for 200-400 bps relative outperformance over the next 1-2 quarters.
• If the stock gaps higher on another order-beat, consider a call spread in VRT rather than outright stock; this captures further upside while limiting multiple compression risk if investors start demanding evidence of cash conversion.
• Maintain a core long in Curtiss-Wright as a defensive industrial compounder, but avoid adding aggressively at current levels unless backlog growth re-accelerates; upside from here is likely slower and more valuation-sensitive.
• Watch supplier names tied to thermal management, power delivery, and liquid cooling for follow-through trades; a basket approach is preferable because the second-order beneficiary set may outperform before the market fully distinguishes winners from one-time project beneficiaries.