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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
|---|---|---|---|---|---|---|---|
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"Small cap growth stocks delivered historic outperformance in Q2 2026, with the strategy returning 25.83% driven by the massive AI capex cycle, record small cap earnings, and attractive valuations. Semiconductors surged 90% as AI infrastructure demand exploded."
The Driehaus Small Cap Growth Strategy delivered exceptional performance in Q2 2026, returning 25.83% net versus 25.71% for the Russell 2000 Growth benchmark. Small caps experienced their largest quarterly outperformance versus large caps since 2001, driven by record earnings growth, attractive valuations, and strong US economic momentum benefiting domestically-oriented companies. The dominant investment theme remains artificial intelligence, with the current AI capex cycle representing the largest of all time. Google's AI token processing grew 330x over two years to 3.2 quadrillion monthly tokens, demonstrating explosive demand growth. The portfolio's semiconductor holdings surged 90.4% as AI infrastructure spending accelerated. Healthcare and industrials also contributed meaningfully, with biotech benefiting from clinical milestones and M&A activity. Energy detracted as the Iran War ceasefire caused oil prices to retreat from over $100 to under $70. The manager reduced AI capex exposure late in the quarter anticipating near-term consolidation but remains constructive on the second half given strong earnings, economic resilience, and broadening market participation beyond mega-cap technology.
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