Capitalizing on U.S. Growth Stocks: Evaluating Calamos Growth Fund's Q3 2025 Performance and Outlook

The decelerating rate environment of Q3 2025 has reshaped investment strategies across the asset management industry, with growth-oriented strategies gaining renewed traction. The Federal Reserve's 25-basis-point rate cut in September 2025 marked a pivotal shift from inflation control to supporting employment, creating a more favorable backdrop for U.S. growth stocks. Against this backdrop, the Calamos Growth Fund (CGRIX) delivered a 7.19% return for the quarter, though it underperformed the S&P 1500 Growth Index's 9.52%. This performance reflects both the fund's strategic positioning and the challenges of navigating a market where earnings momentum and macroeconomic uncertainty coexist.

Strategic Asset Allocation: A Focus on Growth and Flexibility

Calamos Growth Fund's asset allocation strategy in Q3 2025 emphasized U.S. equities, with a heavy tilt toward high-growth sectors such as Information Technology (38.1%), Consumer Discretionary (14.9%), and Health Care (11.5%) according to Calamos analysis. These allocations align with the fund's long-term objective of capitalizing on secular and cyclical growth themes, particularly in industries poised to benefit from artificial intelligence (AI) and global economic rebalancing as noted in Calamos' 2025 outlook. The fund's active management approach allowed it to adapt to shifting market dynamics, including the Fed's policy pivot and labor market softness according to Calamos' investment insights.

Notably, the fund's exposure to Information Technology-its largest sector allocation-positioned it to capture gains from AI infrastructure beneficiaries and software platforms as detailed in Calamos' AI transformation analysis. This strategic emphasis on technology aligns with broader market trends, as the Russell 1000 Growth Index returned 10.50% in Q3 2025, driven by enthusiasm for AI and a weaker U.S. dollar according to Confluence's Q3 analysis. However, the fund's underperformance relative to its benchmark suggests that its active sector rotations and stock selection may not have fully aligned with the quarter's strongest performers.

Navigating a Decelerating Rate Environment

The Federal Reserve's rate cuts in September 2025 created a more accommodative environment for growth stocks, which typically thrive in low-rate settings as reported in Calamos' market update. Calamos Growth Fund leveraged this shift by maintaining a flexible, market-cap-agnostic approach, investing across large-, mid-, and small-cap equities to capture diverse growth opportunities as described in Calamos' fund strategy. The fund's investment team highlighted its focus on companies with strong returns on capital and advantaged business models, which are better positioned to navigate economic transitions as noted in Calamos' fund analysis.

Despite these efforts, the fund faced headwinds from a complex macroeconomic landscape. Payroll data revisions revealed a labor market that lost 911,000 jobs in Q3 2025, raising questions about the sustainability of corporate earnings growth. In response, Calamos adjusted its tactical allocations to prioritize companies with visible earnings catalysts and disciplined valuations as detailed in Calamos' AI-focused strategy. This approach, while prudent, may have limited its ability to fully capitalize on the broader market's rebound.

Outlook: Balancing Opportunities and Risks

Looking ahead, the fund's investment team remains optimistic about U.S. growth stocks, citing continued economic expansion and earnings momentum. However, they caution that volatility could arise from uncertainties around AI infrastructure spending, evolving tariff policies, and geopolitical tensions as outlined in Calamos' Q3 outlook. The fund's October 2025 outlook emphasizes a disciplined, risk-adjusted approach, with a focus on quality companies that can weather macroeconomic shifts as detailed in Calamos' investment commentary.

The Federal Reserve's anticipated rate cuts before year-end are expected to further support growth-oriented equities, particularly in sectors like AI and small-cap stocks as reported in Calamos' market commentary. Calamos Growth Fund's ability to adapt its sector allocations and maintain a balance between defensive positioning and growth participation will be critical in this environment. For instance, its hedged equity strategy (CIHEX) demonstrated resilience by capturing 60% of the S&P 500's Q3 gains while limiting downside exposure as detailed in Calamos' performance analysis, a model that could inform its broader growth strategy.

Conclusion

Calamos Growth Fund's Q3 2025 performance underscores the challenges and opportunities of navigating a decelerating rate environment. While its sector allocations and active management approach positioned it to benefit from AI-driven growth and monetary easing, the fund's underperformance relative to its benchmark highlights the importance of precise stock selection and timing. As the Fed continues to recalibrate its policy stance, the fund's ability to balance long-term growth themes with short-term macroeconomic risks will be pivotal in delivering competitive returns. Investors seeking exposure to U.S. growth stocks in this environment may find Calamos's strategic flexibility and sector expertise appealing, though they should remain mindful of the fund's active management risks and market volatility.