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| # | Fund | Strategy | Style | Geography | AUM | Latest Letter |
|---|---|---|---|---|---|---|
As of Aug 3, 2026
Kennedy Capital Management's Small Cap Growth composite delivered exceptional performance in Q2 2026, gaining 37.53% net and outperforming the Russell 2000 Growth Index by 1,182 bps, driven primarily by an intentional overweight in AI infrastructure and onshoring themes. The portfolio's largest contributor was a provider of integrated memory and AI infrastructure solutions whose shares more than quadrupled on strong results and raised guidance citing AI-driven demand. Small-cap equities staged a powerful recovery in the quarter, with the Russell 2000 surging 21.5% and posting its best first half since 1991, finally closing the gap with large caps. Market leadership was narrow and concentrated in technology and industrial companies benefiting from AI infrastructure spending, though this was considered low-quality by traditional metrics. Looking forward, the manager expects earnings growth rather than multiple expansion to drive returns given relatively full valuations, and anticipates the market will shift to reward earnings quality and durable growth as the cycle matures. The strategy continues finding compelling opportunities across the AI-infrastructure ecosystem and other high-quality growth businesses whose valuations have been overlooked in the market's thematically driven advance.
Kennedy Capital Management's Small Cap Growth strategy focuses on identifying growth securities of predominantly small companies with durable business models able to deploy assets into growing sets of opportunities providing superior rates of return, with current emphasis on businesses benefiting from AI infrastructure and onshoring build-outs.
The manager expects that changes in individual company earnings expectations, rather than further multiple expansion, will drive the bulk of returns from here given relatively full valuations. Small-cap fundamentals are improving to support current valuations, with earnings growth inflecting positively and strong continued gains expected into 2027. The manager anticipates the market will shift to reward earnings quality and proof of durable growth as the cycle matures, moving away from the narrow, high-beta, lower-quality leadership seen in Q2. The core strategy remains focused on identifying individual companies that can benefit from durable trends with attractive economic returns, with compelling opportunities seen across the AI-infrastructure ecosystem and other high-quality growth businesses whose valuations have been overlooked.
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