| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 20.6% | 24.1% | 19.6% |
| 2025 | 2024 |
|---|---|
| 30.5% | -32.9% |
The Driehaus Micro Cap Growth strategy delivered exceptional performance in Q4 2025, outperforming its benchmark by 698 basis points with a 9.12% return versus 2.14% for the Russell Microcap Growth Index. For the full year, the strategy returned 30.49% compared to 21.84% for the benchmark, marking the 26th year of outperformance in the past 28 years. The strategy benefited from the broadening market rally driven by AI spending, improving small cap earnings, and economic expansion. Healthcare was the largest contributor, rising 37.7% as biotech holdings gained from positive clinical results and M&A activity. Materials also performed strongly with continued strength in rare earth elements and critical minerals. The strategy increased healthcare exposure to 36.02% while reducing materials exposure after taking profits. Looking ahead to 2026, the manager maintains a positive outlook supported by strong economic fundamentals, AI capex spending, and improving small cap earnings momentum. Key risks include potential AI infrastructure delays, geopolitical tensions, and labor market disruption from automation technologies.
The Driehaus Micro Cap Growth strategy capitalizes on the broadening market rally driven by AI spending, improving small cap earnings, and economic expansion, with concentrated exposure to healthcare, industrials, and emerging technology themes while maintaining selective positioning across critical minerals and energy transition opportunities.
Looking into 2026, we view the market outlook as positive. The US is currently experiencing economic expansion, strong earnings, stable long-term interest rates, fiscal stimulus, and monetary easing. We believe the outlook for 2026 is bullish with key macro drivers remaining intact. The market has been broadening out with multiple key sectors and industries acting well, reinforcing our conviction that U.S. small caps are entering 2026 with durable momentum and an increasingly favorable risk reward profile.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 14 2026 | 2025 Q4 | CRNX, EOSE, IAG, PRAX, WULF | AI, earnings, energy, growth, healthcare, materials, Micro Cap, small caps | - | AI continues to be the dominant theme driving the market and economy. Demand for AI LLMs is going up exponentially, with demand by AI users and related demand for AI compute continuing to exceed supply. AI capex and data center spending are expected to remain strong, creating opportunities in semiconductors, data center equipment, commodities, energy, power and grid related supply vendors. Small caps continue to outperform since the April bottom, with micro caps leading the market. Small cap earnings have accelerated in 2025 and are improving on an absolute and relative basis, expected to outgrow large cap earnings in percentage terms over the next year. The market has been broadening out with multiple key sectors and industries making new all-time highs. The strategy maintains exposure to energy transition themes including uranium related holdings, energy storage companies like Eos Energy Enterprises, and renewable energy infrastructure. AI infrastructure projects are driving increased power demands, creating opportunities in power generation, grid equipment, and energy storage solutions. Healthcare, including biotech, performed much better during the quarter and second half of the year. Biotech/pharma holdings saw standout gains driven by positive clinical trial results, clinical approvals, breakthrough therapy designations, and an acquisition during the quarter. The biotech ETF is making a new four year high. The strategy saw continued strength in various rare earth elements and critical mineral companies as well as precious metal miners. Materials holdings rose significantly, though exposure was reduced by taking profits in several REE and critical mineral holdings as they advanced sharply in price. AI infrastructure projects are growing in size and AI data centers are becoming much larger with growing power demands. The strategy has exposure to AI related data centers and reduced exposure to emerging new AI data center operators. Demand for AI compute continues to exceed supply, supporting the data center investment theme. |
| Oct 14 2025 | 2025 Q3 | - | Artificial Intelligence, Capex, industrials, small caps, Utilities | - | The fund benefited from robust AI-led hyperscaler and utility capex, fueling broad-based small-cap and micro-cap strength. Rising small-cap earnings and positive sentiment from rate cuts support the outlook, with industrials, technology, and healthcare leading performance. Management sees continued AI-related capital spending and productivity gains sustaining the rally into 2026. |
| Jul 11 2025 | 2025 Q2 | - | earnings growth, Micro Caps, momentum, sector rotation, volatility | - | The commentary highlights extreme volatility driven by tariffs followed by a historic market rebound. Management views elevated volatility as fertile ground for micro-cap growth opportunities with strong momentum. Sector rotation and earnings acceleration underpin the growth outlook. |
| Apr 17 2025 | 2025 Q1 | - | - | - | |
| Jan 11 2025 | 2024 Q4 | - | - | - | |
| Oct 11 2024 | 2024 Q3 | - | - | - | |
| Jul 18 2024 | 2024 Q2 | - | - | - | |
| Apr 27 2024 | 2024 Q1 | - | - | - | |
| Jan 17 2024 | 2023 Q4 | - | - | - | |
| Sep 30 2023 | 2023 Q3 | - | - | - | |
| Mar 31 2023 | 2023 Q1 | - | - | - |
| 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 |
Critical MineralsThe portfolio includes exposure to critical minerals through Ramaco Resources, which produces metallurgical coal and is developing a rare earth elements deposit aimed at strengthening domestic supply chains for defense, batteries, and advanced technologies. However, the rare earths narrative faced increasing investor scrutiny during the quarter. |
Rare Earths Supply Chains Defense Battery Metals Domestic Production | |
Data CentersSupply constraints curtailing infrastructure buildout rate, but compute capacity is being used immediately upon coming online. This differs from dot-com bubble when dark fiber was installed ahead of need. Labor, power and land shortages creating bottlenecks. |
Supply Constraints Utilization Bottlenecks Infrastructure | |
Energy TransitionThe portfolio maintains significant exposure to electrification themes through companies like Bloom Energy, which provides clean, reliable power solutions for AI data centers. The energy transition represents a structural opportunity as companies race to build power infrastructure to support growing electricity demands from AI workloads. |
Electrification Clean Energy Power Generation Fuel Cells Grid Infrastructure | |
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 | |
TechnologyThe fund added three technology companies that have each halved over 2025 and hopes to add more. Many tech stocks had become expensive but recent falls present opportunities, though most still aren't cheap enough including Xero. |
Software Valuation Opportunity Selloff | |
| 2025 Q3 |
InfrastructureFiera Capital enhanced capabilities in infrastructure as a segment where they have deep expertise and privileged access to opportunities. This represents a strategic focus area for capital allocation. |
Infrastructure Private Markets Capabilities |
Small Cap Earnings |
||
Utilities Capex |
||
| 2025 Q2 |
Growth |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| No Elevator Pitches found | ||||||||||
| TICKER | COMMENTARY |
|---|---|
| CRNX | Crinetics Pharmaceuticals Inc Health Care 2.0 |
| EOSE | Eos Energy Enterprises, Inc. Class A represents 2.0% of the strategy in the Industrials sector. |
| IAG | IAMGOLD Corporation represents 1.5% of the strategy in the Materials sector. |
| PRAX | Praxis Precision Medicines, Inc. represents 1.8% of the strategy in the Health Care sector. |
| WULF | TeraWulf Inc. represents 1.8% of the strategy in the Information Technology sector. |
| Ticker | Put/Call | Amount Bought | Shares Bought | % Change | Weight % |
|---|---|---|---|---|---|
| No Recent Buys Data | |||||
| Ticker | Put/Call | Amount Sold | Shares Sold | % Change | Weight % | Status |
|---|---|---|---|---|---|---|
| No Recent Sells Data | ||||||
| Industry | Prev Quarter % | Current Quarter % | Change |
|---|---|---|---|
| No industry data available | |||
