1Q2025 - U.S. Small Company Growth Commentary
The year-to-date market environment has been extraordinary, characterized by the global imposition of tariffs and mounting concerns about their impact on inflation and economic growth. The resulting heightened volatility presents challenges and opportunities for disciplined, long-term investors.
- In Q1 2025, market optimism following the Trump election quickly gave way to fear and uncertainty due to concerns about new cost-cutting measures and trade policies, resulting in heightened volatility.
- The U.S. Small Company Growth Composite Portfolio delivered -10.53% gross of fees and -10.82% net of fees, slightly outperforming the Russell 2000 Growth Index return of -11.12%.
- The top contributors to the quarter’s relative performance were Dutch Bros, EXL Service Holdings, and Goosehead Insurance. The top absolute contributors were Dutch Bros, Progyny, and Goosehead Insurance.
- The most significant detractors from performance, both relative and absolute, were Globant, e.l.f. Beauty, and Revolve Group.
- We initiated new positions in SAIA, Construction Partners, Comfort Systems USA, Wingstop, and Manhattan Associates, and added to several existing positions.
- We eliminated positions in Charles River Labs, Etsy, Yeti Holdings, Align Technology, and Booz Allen Hamilton, and trimmed several existing positions. Many sells and trims were in the Consumer Discretionary sector, where we see more vulnerability to tariff uncertainty and economic dislocation.
- While we cannot control short-term market movements, we respond with disciplined research, patience, and rational decision-making. We regularly stress-test our Portfolios under different policy scenarios, thoughtfully exiting select investments, and identifying new opportunities amid volatility.