Us Small Cap Strategy

US Investors

Overview

The US Small Cap Equity strategy seeks long term capital appreciation by investing in a concentrated group of growth-oriented US domiciled small capitalization equities (market cap less than $7 Billion at purchase). Performance goal is to exceed the return of the MSCI USA Small Cap Index and Russell 2000 Equity weighted Indices (USD).

Investment approach

We employ a bottom up process to develop high conviction portfolios comprised of lasting, high quality companies which exhibit the following characteristics:

  • High returns on capital
  • Defensible business models
  • Industry-leading management teams
  • Strong, consistent free cash flow generation

Comprehensive research

Our subjective evaluation of management teams is a critical step in our process—and has many times proven to be our most effective predictor of future stock performance. Our extensive experience helps us to differentiate between good management teams and exceptional ones. We believe this is absolutely critical to delivering long-term results.

Based on a set of firm-wide values, we believe environmental, social, and governance (ESG) factors are key elements of our long term value to clients. As active investors, we must delve into each companies risk and opportunities, including those related to ESG. We believe that supporting responsible business conduct best protects our client’s capital.

Performance

Annualized Returns

as of December 31, 2021
Laurus US Small Cap
QTD
7.8
YTD
28.0
1 Year
28.0
2 Year
24.2
3 Year
27.1
4 Year
16.3
5 Year
15.4
Since Inception
17.3
Russell 2000 Index
QTD
2.1
YTD
14.5
1 Year
14.5
2 Year
17.0
3 Year
19.6
4 Year
11.0
5 Year
11.6
Since Inception
13.9
MSCI USA Small Cap Index
QTD
3.5
YTD
19.1
1 Year
19.1
2 Year
18.7
3 Year
21.3
4 Year
12.5
5 Year
13.3
Since Inception
14.7

Returns for periods less than one year are not annualized. Data shows past performance and is not indicative of future performance. Current performance may be lower or higher than the data quoted. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost. Inception date – June 2016.

Calendar Returns

as of December 31, 2021
Laurus US Small Cap
12/31/2021
28.0
12/31/2020
21.6
12/31/2019
34.1
12/31/2018
-10.1
12/31/2017
12.7
Russell 2000 Index
12/31/2021
14.5
12/31/2020
19.5
12/31/2019
25.0
12/31/2018
-11.4
12/31/2017
14.2
MSCI USA Small Cap Index
12/31/2021
19.1
12/31/2020
18.3
12/31/2019
26.7
12/31/2018
-10.4
12/31/2017
16.8

Returns for periods less than one year are not annualized. Data shows past performance and is not indicative of future performance. Current performance may be lower or higher than the data quoted. Investment returns and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost. Inception date – June 2016.

Attributes

Performance:
  • Typically outperforms in flat or falling markets and in volatile market environments;
  • Typically underperforms in rapidly rising or strong speculative markets
  • Less volatility measured by standard deviation than its benchmark
  • Strong downside capture ratio
  • Turnover typically between 14-25%
  • High Active Share / High Tracking Error
CHARACTERISTICS:
  • Typical Sector Weights:
    • Overweight: Industrials and Information Technology
    • Underweight: Financials
    • No Weight: Utilities, Energy and Real Estate
  • Concentrated portfolio with 25-50 stocks; typically, 30-35
  • Weighted Average Market Cap: greater than the index and peers
  • Buy Range: $1 – $7 billion
  • Let the winners run up to $25 billion so long as thesis holds
  • Capacity evaluated at $6 billion; Hard Close at $7 billion
  • Benchmark Agnostic

For more information on the strategy please see our quarterly factsheet.
* Source: eVestment alliance in the eVestment US Small Cap Core universe

Laurus Investment Counsel (“Laurus” or the “Firm”) is an independent investment management firm established in 2014 with a head office in Toronto, Ontario. Laurus is registered as a Portfolio Manager in most provinces in Canada and an Investment Adviser with the SEC. Our investment philosophy and proprietary, systematic process is based on fundamental equity analysis of world-class smaller companies. Today we manage a variety of specialized equity portfolios across a variety of capitalization bands for institutional and individual investors.

The Laurus US Small Cap Composite inception and creation was June 2016 and represents an equity strategy managed in US Dollars that utilizes a fundamental approach by investing in a concentrated group of high-quality growth-oriented US domiciled small/mid capitalization equities (market cap less than USD$7 Billion at purchase). This composite has a minimum account size of $5 million.

The Russell 2000 Index NET is a US equity small-cap stock market index of the smallest 2,000 stocks in the Russell 3000 Index.

The standard management fee schedule currently in effect is as follows: 0.85% for the first $25 million; 0.75% on the next $25 million; 0.65% on the next $50 million; 0.55% on the balance. Actual management fees charged may vary depending on applicable fee schedules and portfolio size, among other things. Policies for valuing investments, calculating performance, and preparing GIPS reports are available upon request. Past performance is no guarantee of future results. Results will vary among accounts. The U.S. dollar is the currency used to express performance. Gross returns are gross of management fees, custodial fees and withholding taxes but net of all transaction costs. Composite net returns have been calculated by taking the highest management fee in effect for the respective period from the gross composite returns

A list of composite descriptions and limited distribution pooled funds descriptions are available upon request. For all periods with 6 accounts or less do not present a measure of internal dispersion or the number of accounts included for the year.

Laurus Investment Counsel claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS standards. Laurus Investment Counsel has been independently verified for the periods September 1, 2005 until December 31, 2020. The verification report(s) is/are available upon request.

A firm that claims compliance with the GIPS standards must establish policies and procedures for complying with all the applicable requirements of the GIPS standards. Verification provides assurance on whether the firm’s policies and procedures related to composite and pooled fund maintenance, as well as the calculation, presentation, and distribution of performance, have been designed in compliance with the GIPS standards and have been implemented on a firm-wide basis. Verification does not provide assurance on the accuracy of any specific performance report.

GIPS® is a registered trademark of CFA Institute. CFA Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of the content contained herein.

GIPS Disclosures

You May Enjoy These Key Resources

EMAIL
info@lauruscounsel.com

TOLL FREE
844-430-5501 (toll-free)

VISIT
161 Bay Street, Suite 3950
Toronto, Ontario M5J 2S1

Return to the top of the page