| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 8.17% | 0.03% | 0.03% |
GW&K's Small Cap Core Fund returned 0.03% in Q1 2026, underperforming the Russell 2000's 0.89% return due to sector allocation and stock selection challenges. The fund was hurt by modest underweights to energy, which surged 38.2% on oil price increases, and overweights to consumer discretionary. Technology holdings with AI capital expenditure exposure performed well, including Viavi Solutions, Advanced Energy Industries, MACOM Technology, and Allegro MicroSystems. Materials, industrials, and utilities also contributed positively through Sterling Infrastructure, RBC Bearings, Avient Corporation, and IDACORP. However, healthcare holdings struggled, particularly biotechnology names Veracyte and Arcutis Biotherapeutics. The managers maintain conviction in a cyclical small cap rebound despite geopolitical headwinds, noting that small caps outperformed large caps in Q1 and the second half of 2025. They emphasize their bedrock philosophy of owning diversified portfolios of quality companies with strong competitive positions and effective management teams focused on long-term value creation.
Own a widely diversified portfolio of small cap stocks representing strong companies with competitive positions, margins, and balance sheets run by effective managers focused on long-term shareholder value, positioned for a cyclical rebound.
Conviction that pieces are in place for a normal cyclical rebound benefiting U.S. small caps has been dented but not extinguished by geopolitical conflicts. The general broadening trend remains intact reflecting improving earnings results in small caps.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| May 13 2026 | 2026 Q1 | AEIS, ALGM, ARQT, AVNT, FWRG, HLI, IDA, MTSI, RBC, SF, STRL, UTZ, VCYT, VIAV | energy, healthcare, industrials, small caps, technology, value | - | GW&K's small cap fund underperformed in Q1 due to energy underweight and biotech weakness, but AI-exposed technology holdings delivered strong results. Despite geopolitical uncertainty denting conviction, managers maintain their thesis for a cyclical small cap rebound, emphasizing quality companies with strong competitive positions and effective management teams. |
| Feb 17 2026 | 2025 Q4 | AEIS, AGIO, CIFR, CSWI, CVLT, DAVA, DSGX, FLYW, GMED, HUT, INTA, ITT, MTSI, PAR, QBTS, RARE, RBC, SATS, SF, SKY, SLG, SPXC, STRL, SUPN, THR, VIAV, WULF | healthcare, industrials, materials, Quality, small caps, technology, Trade Policy, value | - | GW&K's small cap fund underperformed in 2025 as markets favored speculative, low-quality stocks over their quality-focused approach. Despite challenging conditions with narrow market leadership and volatile sector rotation, the managers maintain conviction in their disciplined strategy, citing improving small cap earnings growth and broadening economic conditions as positive catalysts ahead. |
| Nov 11 2025 | 2025 Q3 | ABCB, CRDO, HLI, INTA, LOPE, MEDP, MTSI, PRIM, RBC, RGTI, RMBS, SPXC, STRL, SUPN | AI, Biotech, earnings, healthcare, small cap, technology | - | GW&K's small-cap fund gained 6.93% in Q3 but lagged the Russell 2000's 12.40% return as speculative themes in AI, mining, and meme stocks drove market gains. The fund's emphasis on consistent earnings over speculation hurt relative performance despite solid portfolio company fundamentals. Management added AI infrastructure exposure while maintaining focus on long-term cash flow growth. |
| Aug 21 2025 | 2025 Q2 | CHX, CRDO, DAVA, FN, GPOR, HLI, INSM, INTA, IONQ, MCOM, RBC, SEI, SLGN, SPXC, STAG, STRL, TXRH, VIAV | AI, energy, growth, industrials, Natural Gas, small cap, technology, value | SEI | Small cap fund lagged Russell 2000 in Q2 as markets favored AI and high-beta themes the portfolio lacked sufficient exposure to. Manager added energy names with AI data center ties and remains optimistic on small cap earnings growth potential at reasonable valuations, while acknowledging need for better positioning in secular growth themes. |
| Mar 31 2025 | 2025 Q1 | ADC, ARQT, BWIN, CBZ, CHX, COCO, FLYW, FNA, GBCI, GMED, HALO, HLI, HMN, ICFI, INSM, INTA, ITCI, LOPE, MGY, MTSI, NWE, PAR, PATK, PPBI, PRIM, RBC, SKY, SPXC, STAG, STRL, SWTX, TNDM, UMBF, UTZ | AI, Biotechnology, energy, financials, Quality, small caps, Trade Policy | - | GW&K's small cap fund outperformed in Q1 2025 despite a challenging environment marked by trade policy uncertainty. Strong biotech stock selection and quality focus drove outperformance, while financials and AI-related holdings lagged. The manager maintains a defensive posture amid policy fog, emphasizing high-quality businesses until clarity emerges. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q1 |
AIThe market continued to favor stocks with exposure to artificial intelligence capital expenditure build-out. Several fund holdings including Viavi Solutions, Advanced Energy Industries, MACOM Technology, and Allegro MicroSystems were standouts with strong earnings and bookings from AI CapEx exposure. |
AI CapEx Semiconductors Technology |
EnergyThe energy sector returned 38.2% and was an obvious standout as oil prices surged during the quarter. However, the fund had a modest underweight to energy which contributed to underperformance. |
Energy Oil Sector | |
Small CapsThe fund maintains conviction that pieces are in place for a normal cyclical rebound that would benefit U.S. small caps, though this conviction has been dented by geopolitical conflicts. Small cap stocks did outperform large caps in Q1 and second half of 2025, reflecting improving earnings results. |
Small Caps Cyclical Earnings | |
BiotechnologyHealth care had many challenges starting with relative weakness of two biotechnology holdings. Veracyte and Arcutis Biotherapeutics underperformed compared to five benchmark biotech stocks that were up triple digits in the quarter. |
Biotechnology Healthcare | |
| 2025 Q4 |
Behavioral BiasesManager discusses psychological biases in investing, comparing rational Morning Investor mode versus impulsive Nighttime Investor behavior. Emphasizes the importance of overcoming biases like avoiding action that could cause regret, and building habits to make better decisions. |
Psychology Decision Making Bias Discipline |
ValueMature (Value) businesses led performance in Q4 and were the strongest contributors for the full year, reflecting durable execution in companies generating healthy free cash flow and returning capital. |
Free Cash Flow Capital Return Mature | |
GrowthEmerging (Growth) businesses reversed substantial gains in Q4 but delivered strong year overall with significant alpha relative to benchmark. Manager maintains commitment to diversified approach across business life cycles. |
Alpha Emerging Life Cycle | |
| 2025 Q3 |
AIThe market saw impressive gains driven by artificial intelligence stocks, though the fund missed these speculative rallies due to its focus on consistent earnings. The team added two technology stocks to increase exposure to AI infrastructure during the quarter. |
Infrastructure Technology Speculation |
EarningsThe fund emphasizes consistent earnings and cash flow growth over speculative themes. Portfolio companies generally performed well on second-quarter results and forward guidance, though current earnings were not the main market focus during the quarter. |
Cash Flow Growth Guidance Results | |
Small CapsMost small caps lagged the Russell 2000 benchmark despite the index reaching new highs. The fund focuses on small-cap companies with strong market positions and management, prioritizing long-term earnings growth while remaining cautious about short-term trends. |
Russell 2000 Benchmark Underperformance | |
| 2025 Q2 |
AIThe fund discusses AI buildout as a secular theme driving market performance, with investors pushing all-in on AI-related investments. The manager believes the AI investment case is most likely to have durability and generate positive, estimable earnings for companies addressing hyperscaler needs. The fund added two new holdings with AI exposure in the energy sector. |
Data Centers Hyperscalers Infrastructure Buildout Technology |
Small CapsThe manager expresses optimism for earnings growth potential in small cap holdings and notes reasonable valuations available in the small cap space. The fund operates in the Russell 2000 small cap universe, focusing on companies with sustainable earnings growth potential. |
Russell 2000 Valuations Earnings Growth Undervalued Opportunity | |
Natural GasThe fund added Gulfport Energy Corporation, a natural gas E&P company, as power demand and LNG capacity in the US continue to grow above trend. Natural gas is viewed as benefiting from increased power demand including from AI data centers. |
LNG Power Demand Energy Production Infrastructure | |
| 2025 Q1 |
Trade PolicyThe fund discusses navigating uncertainty from tariff announcements and trade policy changes by the current U.S. Administration. The manager analyzes potential impacts on manufacturing, consumers, and trading partners, while monitoring for signs of policy moderation or negotiation. |
Tariffs Manufacturing Negotiation Trading Partners Policy |
QualityThe fund emphasizes higher-quality exposures as a key driver of outperformance during the quarter. The manager notes that stocks with negative earnings, lowest ROE, and highest beta suffered most, demonstrating quality leadership in the market. |
ROE Earnings Beta Leadership Outperformance | |
BiotechnologyThe healthcare sector, particularly biotech stock selection, was extremely strong for the fund. Key contributors included Halozyme, SpringWorks, Insmed, and Arcutis, with two companies receiving takeout offers. |
Healthcare M&A Takeouts Selection Performance | |
AIThe fund notes that artificial intelligence investment became less certain during the quarter with the unveiling of DeepSeek and rumblings of spending adjustments. Several holdings sold off due to fears of slowing AI investment. |
DeepSeek Spending Investment Uncertainty Technology |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Aug 21, 2025 | Fund Letters | Daniel L. Miller | SEI | Solaris Energy | Energy | Oil & Gas Equipment & Services | Bull | NYSE | AI, Demand, energy, infrastructure, Margins, services | Login |
| TICKER | COMMENTARY |
|---|---|
| VIAV | Viavi Solutions, Inc., Advanced Energy Industries, Inc., MACOM Technology, and Allegro MicroSystems, Inc. were standouts in the Fund with strong earnings and bookings. |
| AEIS | Viavi Solutions, Inc., Advanced Energy Industries, Inc., MACOM Technology, and Allegro MicroSystems, Inc. were standouts in the Fund with strong earnings and bookings. |
| MTSI | Viavi Solutions, Inc., Advanced Energy Industries, Inc., MACOM Technology, and Allegro MicroSystems, Inc. were standouts in the Fund with strong earnings and bookings. |
| ALGM | Viavi Solutions, Inc., Advanced Energy Industries, Inc., MACOM Technology, and Allegro MicroSystems, Inc. were standouts in the Fund with strong earnings and bookings. |
| STRL | Sterling Infrastructure, Inc., RBC Bearings, Avient Corporation and IDACORP, Inc. were the primary drivers. |
| RBC | Sterling Infrastructure, Inc., RBC Bearings, Avient Corporation and IDACORP, Inc. were the primary drivers. |
| AVNT | Sterling Infrastructure, Inc., RBC Bearings, Avient Corporation and IDACORP, Inc. were the primary drivers. |
| IDA | Sterling Infrastructure, Inc., RBC Bearings, Avient Corporation and IDACORP, Inc. were the primary drivers. |
| VCYT | Veracyte, Inc. and Arcutis Biotherapeutics, Inc. compared to five benchmark stocks that were up triple digits in the quarter. |
| ARQT | Veracyte, Inc. and Arcutis Biotherapeutics, Inc. compared to five benchmark stocks that were up triple digits in the quarter. |
| HLI | Houlihan Lokey, Inc., Stifel Financial Corp., Utz Brands, and First Watch Restaurant Group, Inc. were the biggest detractors and for now we have maintained our conviction in the attractive long-term opportunity for each. |
| SF | Houlihan Lokey, Inc., Stifel Financial Corp., Utz Brands, and First Watch Restaurant Group, Inc. were the biggest detractors and for now we have maintained our conviction in the attractive long-term opportunity for each. |
| UTZ | Houlihan Lokey, Inc., Stifel Financial Corp., Utz Brands, and First Watch Restaurant Group, Inc. were the biggest detractors and for now we have maintained our conviction in the attractive long-term opportunity for each. |
| FWRG | Houlihan Lokey, Inc., Stifel Financial Corp., Utz Brands, and First Watch Restaurant Group, Inc. were the biggest detractors and for now we have maintained our conviction in the attractive long-term opportunity for each. |
| Ticker | Put/Call | Amount Bought | Shares Bought | % Change | Weight % |
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