Sound philosophy
Seeks small-cap growth companies that are industry leaders, serving markets that are growing substantially and producing solid financial returns
Experience and vision
Combined, the team has more than 100 years of industry experience and more than 35 years of experience
Consistent performance
Since lead portfolio manager Tim Miller assumed management duties in April 2010, the Strategy has delivered strong performance relative to its benchmark and peers
Our goal is above-average returns with below average risk
We believe small-cap securities are inefficient by nature. They are less covered, have a wider dispersion of expectations and, high non-systematic risk, and offer, we believe, more attractive return potential. The team seeks to purchase successful, innovative small-cap growth companies that are pursuing large-market opportunities.
We believe successful small-cap growth companies typically:
- Serve large-market opportunities and grow substantially in excess of average industry growth
- Are developing into leaders in their respective industries
- Have enduring financial models
- Have effective company management
Dynamic growth
- Exposure to the dynamic growth prospects provided by innovative small-cap companies.
Opportunities to add alpha
Inefficiencies within small-cap markets, including limited analyst coverage, make small-caps a ripe area for active managers to generate alpha.
Attractive risk-return profile
- Owning a diversified portfolio of high-quality growth companies balanced across the risk spectrum.
Discovering quality growth through a specific set of criteria
Our investment process involves three distinct phases:
- Quantitative screen of the investment universe for quality growth candidates
- Qualitative analysis of the remaining roughly 400 to 600 companies to find the highest conviction investments
- Portfolio will hold 70 to 90 of our highest conviction ideas with overlayed risk controls
Quantitative screen: Narrowing the universe
Screen eliminates areas of the universe that we view as inferior companies. We screen for:
Superior and sustainable unit growth relative to peers
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Pricing power producing upward momentum in margins
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Balance sheet and cash flows able to internally fund growth
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Superior and improving growth and profitability that result in increasing return on capital invested and return on assets
Qualitative criteria: Our primary driver of alpha and where we focus the majority of our time
Qualitative factors drive our decision making. We focus on the following criteria in our bottom-up analysis of companies:
- Determine total addressable market
- Evaluate global industry opportunity and competitive landscape
- Company access to determine management is aligned with investment thesis
- Analyze management leadership ability and execution history
- Determine ability to outperform expectations
- Understand company direction beyond the numbers.
We seek to achieve above-average returns with below-average risk.
For more information on our equity capabilities
Risks
On January 17, 2024, Joshua Brown was added as an additional portfolio manager of the Fund.
The value of the portfolio may fall as well as rise, and you may not receive back the amount invested.
As a class, equities carry higher risks than bonds or money market instruments.
Because the strategy expects to hold a concentrated portfolio of a limited number of securities, the strategy’s risk is increased because each investment will have a greater effect on the strategy’s overall performance.
Investments in small and/or medium-sized companies typically exhibit greater risk and higher volatility than larger, more established companies.
IBOR risk is the risk that changes related to the use of the London interbank offered rate (LIBOR) or similar rates (such as EONIA) could have adverse impacts on financial instruments that reference these rates. The abandonment of these rates and transition to alternative rates could affect the value and liquidity of instruments that reference them and could affect investment strategy performance.
Natural or environmental disasters, such as earthquakes, fires, floods, hurricanes, tsunamis, and other severe weather-related phenomena generally, and widespread disease, including pandemics and epidemics, have been and can be highly disruptive to economies and markets, adversely impacting individual companies, sectors, industries, markets, currencies, interest and inflation rates, credit ratings, investor sentiment, and other factors affecting the value of the Strategy’s investments. Given the increasing interdependence among global economies and markets, conditions in one country, market, or region are increasingly likely to adversely affect markets, issuers, and/or foreign exchange rates in other countries. These disruptions could prevent the Strategy from executing advantageous investment decisions in a timely manner and could negatively impact the Strategy’s ability to achieve its investment objective. Any such event(s) could have a significant adverse impact on the value and risk profile of the Strategy.
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