H1 2026: Strong Returns, and Lessons about Sector Diversification

Performance

Tilden Path's portfolio — focused on finding next-generation winners among small- and mid-cap tech companies, with an 80% allocation to software — returned 21.7% in H1 2026, against a 14.3% decline for IGV (the software ETF), 13.1% for the Nasdaq Composite, and 10.2% for the S&P 500. Since inception in Sept 2022, Tilden's cumulative returns stand at 120%, against 70% for IGV, 129% for the Nasdaq Composite, and 104% for S&P 500. Tilden has zero Mag7 exposure.

‍H1 returns were powered by DigitalOcean (covered in our Q3 2025 letter), Twilio (Q4 2025), and Okta (Q2 2025), among others — all names that score well on Durable Growth Score's Product/Process Irreplicability, Switching Costs and Tech Stewardship factors, and also score favorably on the FIGHT framework. Three years in, our Durable Growth Score approach — paired with insisting on margin of safety — is proving out: we're finding resilient businesses without getting pulled into the "software is dead" debate.

View on Software

In 2025, we made the case for proprietary data sets as the key differentiator, later supplemented by the FIGHT framework. More recently, ground research points to a newer pattern: in the era of LLMs acting as the foundational intelligence layer, the companies providing key services via API to AI agents and applications can be winners — Okta for authorization, Twilio for communications.

Learnings

‍Three years in, the principle is sector diversification; the mechanics that make it work are correlation-aware position sizing and discipline at the individual equity level.

‍Sector Diversification

‍The bigger lesson from three years of this is sector diversification — not just across tech sectors, but within a single sector like software too. Cybersecurity, infrastructure software, vertical SaaS, and payments are as different from each other as semiconductors are from software. GICS lumps them all into one sector; our view is to not follow that mapping.

Sector Correlations

Position sizing has to account for correlation, not just conviction — sizing across sectors to minimize factor exposure to assets that tend to move together, rather than treating each position as independent.

Position Sizing

‍At the individual equity level, position size should track expected return, with a willingness to trim winners once the thesis has played out rather than holding out of habit.

What We're Researching

Our focus continues to look for winners in the next frontier of tech, among semiconductors, software, robotics, defense tech, and new energy tech, so that no single sector's fortunes decide the portfolio's.

Disclaimer

• Past performance is no guarantee of future returns.

• Not Investment Advice. All investing involves risk and possible loss of principal.

• Performance shared here belongs to the first client that invested in Tilden’s SMID Tech strategy in 2022.

• In the analysis, we use  third-party resources we believe to be reliable, but cannot guarantee the accuracy of such information. We believe the information we provide is accurate as of the date furnished, but we do not revisit past material to update it.