The Voya MI Dynamic Small Cap Fund (VOYDX) saw its third-quarter performance affected by the decision not to hold Bloom Energy Corp. (BE), a key player in the renewable energy sector. The fund’s strategic exclusion of BE coincided with the stock’s significant rally during the quarter.
- VOYDX returned 6.1% in Q3 2025, lagging behind the Russell 2000’s 12.8% gain
- Bloom Energy (BE) rose 42% during the quarter, contributing to sector momentum
- BE’s market cap exceeded $12 billion by September 30, 2025
- Fund managers cited high valuation and risk profile as reasons for excluding BE
- Strategic underweighting of BE resulted in tracking error against the benchmark
- Active small-cap funds face heightened scrutiny when missing major momentum stocks
The Voya MI Dynamic Small Cap Fund (VOYDX) experienced a negative performance trajectory in Q3 2025, with its returns lagging behind key benchmarks. A significant factor contributing to the underperformance was the fund’s exclusion of Bloom Energy Corp. (BE), which delivered a 42% gain during the same period. Despite BE’s strong momentum, VOYDX maintained a neutral position in the stock, reflecting a deliberate asset allocation strategy focused on other small-cap opportunities within the energy and renewables sectors. The fund’s benchmark, the Russell 2000 Index, rose 12.8% in Q3, while VOYDX posted a return of 6.1%, falling short of both the index and peer funds in the small-cap category. The absence of BE, which had accelerated after announcing new utility partnerships and expanded hydrogen pilot programs, created a notable tracking error. The fund’s managers cited valuation concerns and a cautious approach to high-growth, high-valuation small-cap names as rationale for the exclusion. The underperformance underscores the impact of stock selection in active fund management, particularly in volatile sectors like clean energy. With BE’s market capitalization surpassing $12 billion by the end of September, its performance had a measurable effect on small-cap indices and funds with exposure to renewable infrastructure. VOYDX’s decision to remain out of the stock highlights the trade-off between risk mitigation and missed upside potential in a strong market environment.