The curated database of hedge funds that publish investor letters. Research by geography, strategy, and schools of thought.
| # | Fund | Strategy | Style | Geography | AUM | Latest Letter |
|---|---|---|---|---|---|---|
As of Oct 20, 2026
During the third quarter of 2026, the Driehaus Small Cap Growth Strategy underperformed its benchmark, declining 14.55% net of fees compared to a 9.39% decline for the Russell 2000 Growth Index. For comparison, the broader Russell 2000 fell 7.23% while the S&P 500 Index gained 2.3%. Strategy underperformance was primarily driven by severe multiple compression across market leadership sectors, particularly industrials and technology, as bond yields rose sharply. Cash weighting stood at 2.5% at quarter-end, with the strategy ending the period overweight financials, consumer staples, and healthcare, while reducing former large overweights in industrials and energy. Macroeconomic headwinds were dominated by surging 10-year and 30-year Treasury yields surpassing 5%, driven by resilient nominal GDP growth above 6%, persistent inflation above the Fed's 2% target, fiscal deficit expansion, and the unwinding of the Japanese yen carry trade. Simultaneously, the market experienced severe factor volatility and profit-taking in artificial intelligence infrastructure, marked by the worst tech momentum drawdown on record. Nevertheless, management views AI capex demand as fundamentally robust, arguing that compute demand continues to outpace data center capacity. Portfolio activity reflected significant sector repositioning. The team reduced industrial exposure from a multi-year overweight toward equal weight by trimming AI-related electrical equipment, engineering, and power grid suppliers. Within technology, exposure shifted from hardware and semiconductors toward software and agentic AI security. Key top holdings at quarter-end included Guardant Health, Praxis Precision Medicines, Spyre Therapeutics, and JFrog, with healthcare providing the strategy's strongest positive contribution.
Invest opportunistically in small-cap companies exhibiting accelerating earnings growth, robust fundamentals, and durable business models poised to outperform as market breadth stabilizes.
Management remains constructive on the near-term market outlook as small-cap valuations trade near historical lows while corporate earnings reach record highs.
Neutral / Balanced
Market Conviction
Growth Outlook
Risk Appetite
Capital Deployment
Forward Guidance
Language Signal
Perceived Risk
Opportunity Density
Time Horizon
Top Conviction Themes
Key Catalysts
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