| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 14.75% | -2.62% | -2.62% |
The 1290 Essex Small Cap Growth Fund declined 2.62% in Q126, outperforming the S&P 500's 4.33% decline as small caps showed relative strength despite geopolitical volatility from the Iran Conflict. The fund benefited from strong sector allocation and stock selection, with Consumer Discretionary leading performance through workforce development and job training investments while avoiding underperforming retail. Industrials contributed positively via smart defense spending, AI infrastructure, and power generation investments. Technology added value through semiconductor and component positioning for AI, robotics, and automation, offsetting software sector pressure. Healthcare detracted due to specialty pharmaceutical rotation, while Financials and Materials also weighed on performance. The manager expects continued strong earnings growth of 45% for small caps in Q126, driven by margin expansion and productivity improvements. They remain optimistic about the economic environment supported by benign Fed policy, fiscal stimulus, and ongoing infrastructure spending benefits. The fund maintains focus on companies benefiting from reshoring, defense spending, and technology buildout while avoiding commodity exposure.
Small cap growth companies are positioned to benefit from strong earnings growth, attractive valuations, and ongoing productivity improvements, supported by infrastructure spending, defense investments, and technology buildout despite near-term geopolitical and market volatility.
The manager sees an environment of solid economic growth led by a benign Fed, strong fiscal stimulus, and ongoing benefits from infrastructure legislation. They expect continued strong earnings growth and believe small cap companies will continue to benefit from productivity improvements and attractive valuations.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Apr 25 2026 | 2026 Q1 | - | AI, defense, growth, industrials, infrastructure, small caps, technology | - | Small cap growth fund outperformed broader markets in volatile Q126, benefiting from infrastructure spending, defense investments, and AI semiconductor positioning. Strong earnings growth of 45% expected for small caps driven by productivity improvements and attractive valuations. Manager remains constructive on economic environment supported by fiscal stimulus and infrastructure legislation despite geopolitical headwinds. |
| Jan 30 2026 | 2025 Q4 | - | AI, defense, energy, growth, infrastructure, semiconductors, small caps, Valuations | - | Essex Small Cap Growth Fund positions for rotation away from mega-cap concentration toward neglected small-cap opportunities. Fund targets AI semiconductors, defense applications, infrastructure spending, and selective energy services with rare earth exposure. Small-cap fundamentals improving with sales growth recovery and attractive valuations. Expected catalysts include Fed rate cuts and global growth acceleration favoring small caps over S&P 500 in 2026. |
| Nov 5 2025 | 2025 Q3 | - | AI, Defense Spending, growth, healthcare, industrials, nuclear, small caps, technology | - | Essex Small Cap Growth Fund capitalized on AI infrastructure resurgence and power grid modernization themes in Q3 2025. Strong positioning in defense technologies, healthcare innovation, and manufacturing reshoring drove outperformance despite micro-cap headwinds. With small cap earnings finally turning positive after ten quarters and valuations at historically attractive levels, the fund is positioned for continued outperformance. |
| Jul 27 2025 | 2025 Q2 | - | AI, defense, growth, healthcare, industrials, infrastructure, small cap, technology | - | Essex Small Cap Growth Fund capitalized on broad small-cap rally in Q2 2025, driven by infrastructure spending, defense modernization, and AI themes. Despite strong performance, valuations remain attractive with earnings growth expected to turn positive after ten quarters of decline. The fund maintains focus on structural growth themes including reshoring and power grid modernization. |
| Mar 31 2025 | 2025 Q1 | - | AI, defense, financials, growth, infrastructure, Onshoring, small caps, technology | - | Small cap growth fund weathered Q1 selloff by maintaining conviction in cyclical reversal thesis after 13 years of underperformance. Strong stock selection in Financials and defensive Consumer Discretionary positioning helped offset Technology weakness from AI volatility. Manager used AI selloff to add exposure, focusing on secular themes of onshoring, infrastructure, defense spending, and early-stage AI deployment through attractive valuations. |
| Dec 31 2024 | 2024 Q4 | MSTR, SMCI | Biotech, growth, healthcare, industrials, Microcap, small caps, technology, value | - | Essex positions for small cap outperformance driven by superior earnings growth expectations (25% vs 15% for large caps) and historic trough valuations. Strong stock selection delivered positive Q4 returns across Healthcare, Technology, and Industrials. Four key themes drive the strategy: infrastructure spending, defense, reshoring, and sustainable solutions. Market broadening expected to continue favoring neglected small cap segments. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q1 |
AIThe quarter saw a major shift in psychology on the AI buildout away from seemingly unlimited opportunities to worries about winners and losers, costs and financing risks, and potential negative impacts on employment. Despite software pressure from AI disruption concerns, the fund benefited from strong positioning in semiconductors and components that provide building blocks for AI, robotics, automation, and space technologies. |
Semiconductors Components Software Automation Robotics |
Infrastructure SpendingThe fund continues to benefit from ongoing Infrastructure Act and Big Beautiful Bill spending, particularly in infrastructure spending, capital spending, reshoring of manufacturing, and increased R&D spending. Industrials was the second largest positive contributor with focus on infrastructure for AI buildout and data centers. |
Infrastructure Capital Spending Manufacturing Data Centers | |
Defense SpendingIndustrials sector contributed positively to performance with continued focus on smart defense spending alongside infrastructure and power generation investments. |
Defense Military Government | |
OnshoringThe fund is positioned to benefit from the ongoing reshoring of manufacturing trend, supported by fiscal stimulus and infrastructure legislation. |
Manufacturing Domestic Production Supply Chain | |
Small CapsSmall caps outperformed during the quarter with Russell 2000 Growth declining only 2.81% versus S&P 500's 4.33% decline. Strong earnings growth of 45% expected for Q126 led by margin expansion as small cap companies benefit from productivity improvements. Attractive valuations and strong earnings growth support the small cap thesis. |
Valuations Earnings Growth Productivity | |
| 2025 Q4 |
AIAI developments from major companies are causing rapid market changes and stock price declines for quality businesses. The manager sees AI creating disruption across white collar work including finance, law, software development, and insurance. Software companies face particular headwinds from fewer seats, lower pricing power, and competition from AI-first upstarts. |
Artificial Intelligence Software Disruption White Collar Automation |
SoftwareSoftware companies are experiencing significant declines as the market reassesses AI impacts. The manager notes three vectors affecting valuations: fewer seats due to efficiency gains, lower pricing power from AI competition, and reduced new customer bookings. However, believes some software solutions won't be easily replaced and is reviewing opportunities in the wreckage. |
SaaS Enterprise Software Pricing Power Competition Valuation | |
GLP1The manager sold Novo Nordisk after brief ownership due to competitive disadvantage versus Eli Lilly. While NVO was first to market with oral GLP-1 and trades at lower valuation, LLY has superior product and advantage likely to persist despite potential aggressive pricing from NVO. |
Diabetes Pharmaceuticals Competition Pricing | |
Home ImprovementFloor & Decor represents an attractive long-term opportunity following the Home Depot disruption model. The company has higher inventory selection and lower prices than competitors, taking market share for years. Current margins are depressed but should scale toward low-to-mid teens as store base builds out. |
Retail Flooring Market Share Margins Expansion | |
| 2025 Q3 |
AIThe quarter was characterized by a resurgence of interest in AI, infrastructure, and data centers as both governments and cloud computing companies announced development and investment projections. The fund believes many software companies are well positioned to harness AI technology to increase efficiency and deliver more useful products to customers. |
Infrastructure Data Centers Software Productivity |
Grid UpgradeThe Fund benefited from consistent focus on companies that will participate in the growth area of power grid related names, specifically the increased demand for electricity generation, transmission, and distribution. This positioning helped drive strong performance in the Industrials sector. |
Power Grid Electricity Transmission Distribution | |
OnshoringThe Fund benefited from the positive environment driven by reshoring of manufacturing to the US. This trend supported performance in industrial companies focused on domestic manufacturing capabilities. |
Manufacturing Domestic Reshoring | |
Defense SpendingThe Fund benefited from increased defense spending, particularly in areas such as drone technologies, radar technologies, and security. This contributed to strong performance in the Industrials sector during the quarter. |
Drones Radar Security Military | |
NuclearThe quarter saw early signs of heightened interest in the development stage areas of nuclear energy. These areas have the potential to be exciting over the next decade, though they remain early stage, and most companies have yet to deliver meaningful product output. |
Energy Development Early Stage | |
| 2025 Q2 |
Infrastructure SpendingThe fund benefits from consistent focus on companies participating in power grid related growth areas, specifically increased demand for electricity generation, transmission, and distribution. This theme is driven by the positive cycle created by reshoring of manufacturing to the US. |
Power Grid Electricity Transmission Distribution Reshoring |
Defense SpendingThe portfolio benefits from the strong defense cycle with particular emphasis on drone technologies, radar technologies, and security. This represents a key growth area for the fund's industrial holdings. |
Drones Radar Security Defense Cycle | |
AITechnology was a strong positive contributor with semiconductors involved in the data center/AI buildout leading performance. The fund also had strong performance from AI related software names and exposure to emerging nuclear power area supporting AI infrastructure. |
Data Centers Semiconductors Software Nuclear Power | |
OnshoringReshoring of manufacturing to the US creates positive cycles for the fund's holdings, particularly in power grid infrastructure and industrial companies. This theme supports multiple investment opportunities across the portfolio. |
Manufacturing Reshoring Industrial | |
RoboticsLIDAR companies that are instrumental in the deployment of robotics led performance for the quarter. This represents a key technology enabler for automation and industrial applications. |
LIDAR Automation Industrial Applications | |
| 2025 Q1 |
AIThe technology sector, especially AI-related stocks, came under significant pressure following the Deep Seek announcement. However, the manager believes the AI buildout remains very early and usage deployment throughout the economy is in its infancy. Their AI exposure focuses on data center development, software usage, and connectivity needs. |
Data Centers Software Connectivity Deep Seek |
OnshoringThe manager sees economic strength from reshoring of manufacturing themes. Workforce training is increasingly important as reshoring of manufacturing, particularly high-tech manufacturing, accelerates. They have exposure to machine vision and robotics for manufacturing reshoring. |
Manufacturing Workforce Training Machine Vision Robotics | |
Infrastructure SpendingEssex continues to see economic and earnings strength coming from infrastructure spending themes. The thesis driving previous outperformance of industrials and power grid related names was increased demand for electricity generation, transmission, and distribution. |
Power Grid Electricity Transmission Distribution | |
Defense SpendingEssex continues to see economic and earnings strength coming from smart defense spending themes, which is one of the positive drivers they identify for the economy and earnings outlook. |
Smart Defense Defense | |
| 2024 Q4 |
Infrastructure SpendingEssex continues to see economic and earnings strength coming from infrastructure spending themes. The portfolio benefited from companies that will benefit from the rebuilding of the power grid in the US. This theme is driving positive performance in the Industrials sector. |
Power Grid Utilities Electrical Equipment Construction Government |
Defense SpendingSmart defense spending is identified as a positive theme driving economic and earnings strength. The fund has selective exposure to smart defense which contributed positively to Industrials performance during the quarter. |
Defense Government Aerospace Security Military | |
OnshoringReshoring of manufacturing is highlighted as one of the positive themes driving economic and earnings strength. This represents a structural shift in global supply chains that Essex expects to continue benefiting from. |
Manufacturing Supply Chain Domestic Trade Policy Industrial | |
Energy TransitionThe fund maintains exposure to clean energy ecosystem and environmental solutions despite some weakness in solar-related names. Essex remains positive on names related to mitigation efforts from pollution and climate issues, remediation for forever chemicals, and expansion of the power grid to satisfy increasing demands in a rapidly electrifying world. |
Clean Energy Grid Expansion Environmental Electrification Renewable |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
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