| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 16.8% | 2.4% | 29.5% |
| 2025 | 2024 |
|---|---|
| 29.5% | 21.3% |
Essex Small Cap Growth Fund targets long-term capital growth through investments in small and micro-cap companies, believing current market conditions favor a rotation away from mega-cap concentration. The fund sees early signs of market broadening after 13 years of large-cap outperformance, with small-cap fundamentals improving as sales growth bottomed in early 2024 and interest expense pressures peaked in 2023. Key return drivers include exposure to AI-enabling semiconductors, selective energy services with rare earth exposure, defense applications, and infrastructure spending themes. The portfolio benefits from smart sector allocation in Information Technology, Energy, Communication Services, Consumer Discretionary, and Financials while maintaining minimal exposure to commodity-oriented Materials. Primary risks include AI bubble concerns and inherent small-cap volatility, though valuations remain attractive particularly for microcap stocks. Expected catalysts include Fed rate cuts, global PMI improvements, and continued market broadening as institutional investors rotate toward neglected small-cap segments. The manager expects small caps may deliver superior income growth versus the S&P 500 in 2026.
Small cap growth stocks are positioned for outperformance as market concentration at mega-cap levels reaches unsustainable levels and fundamental factors support a rotation toward neglected smaller companies with attractive valuations.
The manager expects continued market broadening with small and microcap segments beginning to participate rather than a market sell-off resolving current concentration. Small cap stocks may show more income growth than the S&P 500 in 2026, supported by Fed rate cuts and improving global economic conditions.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 30 2026 | 2025 Q4 | - | AI, defense, energy, growth, infrastructure, semiconductors, small caps, Valuations | - | The fund has exposure to semiconductors that are building blocks for AI and robotics applications. However, there are growing concerns about AI-related exuberance and potential bubble formation, with investors worried about the pace of AI spending and lack of returns so far. Despite these concerns, the manager notes productivity improvements in companies implementing AI tools. Essex continues to see economic and earnings strength coming from positive themes including infrastructure spending. The portfolio has exposure to stocks involved in the buildout of data centers and power grid infrastructure, though this area experienced some underperformance in Q4 as investors worried about spending pace. The fund benefits from smart defense spending as one of the positive economic themes driving strength. The portfolio has exposure to semiconductors with defense applications and space applications, contributing to performance in the Information Technology sector. Reshoring of manufacturing is identified as one of the positive themes contributing to economic and earnings strength that Essex continues to see. This represents a structural shift in global supply chains that benefits domestic manufacturing capabilities. The portfolio benefited from selective focus on energy service providers with exposure to rare earths and other minerals deemed important to national security. However, the fund does not have direct exposure to precious metals or rare earths, which were strong performers during the period. The manager believes small cap stocks may show more income growth than the S&P 500 in 2026, with sales growth bottoming in Q1 2024 and continuing to improve. Valuations remain very attractive for small cap stocks, particularly microcap stocks, despite increased valuations across all market segments. |
| Nov 5 2025 | 2025 Q3 | - | AI, Healthcare Innovation, infrastructure, reshoring, small caps | - | The commentary highlights strong performance in small caps, supported by AI enthusiasm, infrastructure investment, and manufacturing reshoring. Portfolio managers are optimistic on small-cap growth given accelerating revenue and earnings trends and historically cheap relative valuations. Key growth drivers include AI-enabled software, power grid infrastructure, and specialized healthcare technologies. |
| Jul 27 2025 | 2025 Q2 | - | growth, healthcare, small caps, technology | - | |
| Mar 31 2025 | 2025 Q1 | - | - | - | |
| Dec 31 2024 | 2024 Q4 | - | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
AIAI has been integrated into RGA's research process through tools like NotebookLM, Gems in Gemini, and Claude Code. The firm views AI as a force multiplier for human judgment rather than a replacement, emphasizing the Kasparov Law principle. They believe the market narrative around AI displacement is swinging to unhelpful extremes, creating investment opportunities. |
Machine Learning Automation Software Productivity Innovation |
Defense SpendingThe entire world is rapidly rearming off an extremely low base of defense spending. This exposure focuses on companies that make armaments for nation state security and materially outperformed for the year. |
Defense Armaments Rheinmetall Palantir RTX | |
Infrastructure SpendingPlaying on the continued theme of infrastructure spending, defense and energy sustainability, positions in Industrial and Energy sectors including Oshkosh, Coterra, OSI Systems, and Herc Holdings added positively to performance. |
Defense Energy Industrial Government Sustainability | |
OnshoringReshoring of supply chains presents compelling opportunities for smaller companies. AZZ is positioned to benefit from domestic manufacturing reshoring trends, while the broader strategy targets companies that can capitalize on this shift. |
Reshoring Supply Chains Manufacturing | |
Rare EarthsThe portfolio benefited from selective focus on energy service providers with exposure to rare earths and other minerals deemed important to national security. However, the fund does not have direct exposure to precious metals or rare earths, which were strong performers during the period. |
National Security Critical Minerals Energy Services | |
Small CapsSmall caps getting strong start in 2026 supported by easing monetary conditions and constructive fiscal backdrop. Small caps more sensitive to economic cyclicality which is overdue for expansion. Expected to grow at better pace than large caps in 2026 after long period of underperformance. |
Value Growth Cyclical Monetary Policy Fiscal Policy | |
| 2025 Q3 |
Small CapsSmall caps getting strong start in 2026 supported by easing monetary conditions and constructive fiscal backdrop. Small caps more sensitive to economic cyclicality which is overdue for expansion. Expected to grow at better pace than large caps in 2026 after long period of underperformance. |
Value Growth Cyclical Monetary Policy Fiscal Policy |
| 2025 Q2 |
Growth Investing |
|
Small CapsSmall caps getting strong start in 2026 supported by easing monetary conditions and constructive fiscal backdrop. Small caps more sensitive to economic cyclicality which is overdue for expansion. Expected to grow at better pace than large caps in 2026 after long period of underperformance. |
Value Growth Cyclical Monetary Policy Fiscal Policy |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| No Elevator Pitches found | ||||||||||
| TICKER | COMMENTARY |
|---|---|
| No ticker commentary found. | |
| Ticker | Put/Call | Amount Bought | Shares Bought | % Change | Weight % |
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