Institutional Strategies

Small Cap Growth

The strategy seeks U.S. common stocks of small capitalization companies. Small capitalization companies typically have market capitalizations within the range of companies in the Russell 2000® Growth Index at time of acquisition. The strategy seeks new or unseasoned companies in their early stages of development, or smaller companies positioned in new or emerging industries where the portfolio management team believes there is opportunity for higher growth than in established companies or industries.

Investment Philosophy

The team seeks to purchase successful, innovative small-cap growth companies that are pursuing large-market opportunities.

We believe common characteristics of successful small-cap growth companies are:

  • Serve large-market opportunities and/or markets growing substantially in excess of the average industry and/or the general economy
  • Leaders in their industry
  • Enduring financial model
  • Effective company management

Investment Process

The team looks for sustainable growth that it believes is highly valued in the market and driven by the following components:

  • Sales unit growth
  • Margins showing upward momentum
  • Internal cash flow generation
  • Rising ROIC

Once a company is selected, the following is monitored on a regular basis:

  • Earnings quality, financial metrics
  • Competitive trends
  • Management's ability to execute
  • Quantitative risk review

Diversification across Growth Spectrum

Throughout the portfolio construction process, the team monitors the strategy's allocation across a proprietary spectrum of types of growth companies. Any of these categories may assume market leadership, so the team strives to maintain exposure to each. The growth spectrum is comprised of four major categories: Aggressive Growth, Accelerating Growth, Consistent Growth and Out of Favor Growth.

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Key Features

Composite Performance History Since 2/1/2003 
Benchmark Russell 2000 Growth Index
Style Fundamental, Growth
Target Alpha 200 bps above Index
Over full market cycles (3-5 years)
Peer Universe U.S. Small Cap Growth Equity
Typical Tracking Error 400-800 bps
Holdings Range 70-90
Max Position Size 5%
Sectors +/- 10 percentage points of the Index
Proprietary Growth Spectrum Diversification across four growth buckets: Aggressive, Accelerating, Consistent and Out of Favor
Investment Vehicles Institutional Separate Account
Collective Investment Trust
U.S. Mutual Fund: Institutional Share Class
Variable Insurance Portfolio

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