Christmas might just have come early for small cap manager researchers with two popular firms, from very different ends of the spectrum, placing new offerings under the tree.
It is the firm's first venture into the small cap world but will be run veteran US small cap specialist Tucker Walsh, who was previously chief executive of institutional manager Copper Rock Capital Partners.
Walsh was hired by Polen Capital in June to run a team based in Boston and lead the firm’s expansion into small caps. He is already running an institutional strategy at the firm, which the mutual fund will follow.
Walsh left Copper Rock in 2014 as the business consolidated into an international, global small-cap focused firm and discontinued its US products, he told Citywire in an interview.
The existing small company strategy has a significant weighting in technology stocks, particularly in the information technology and software categories, he said.
‘When you think about the technology area, typically you think about it as really hyper-growth especially if you think about small cap,’ said Walsh.
‘Our companies grow very strongly, on average most of them grow in the 15% to 25% range on a long-term basis but it’s not hyper-growth and we tend toward companies with strong and steady growth that they can sustain so that they can compound their earnings. So having a healthy weighting in technologies has been helpful to us so far this year,’ he added.
The strategy also has what Walsh calls ‘a decent sized weighting in consumer discretionary.’
He explained that while consumer discretionary has not been a sector that’s been favored in the market, the strategy has actually had a very good return in that area again just due to the fact that the team has stuck to its process to find businesses that are able to compound their earnings growth.
‘The way that we view small caps, the best way to invest in small caps, is to find businesses that grow and compound earnings,’ said Walsh.
‘So when I say "quality," what I mean by that [is] we are looking for companies that are profitable companies that generate cash, have solid balance sheets, whose management has proven that they are greater allocators of capital, so that’s what we consider to be a quality business.’
It is the second mutual fund Polen has launched this year, doubling its total offering to four funds. In January it launched the Polen International Growth fund, adding to the existing Polen Growth fund and the Polen Global Growth fund.
Goldman plots for small cap growth fund
From a boutique to a behemoth, Goldman Sachs Asset Management (GSAM) is to launch the Goldman Sachs Small Cap Growth fund, according to a Securities and Exchange Commission (SEC) filing.
Benchmarked against the Russell 2000 Growth index, the fund will invest in approximately 100 to 150 small-cap companies that are considered by the firm to be positioned for long-term growth.
Slated to launch on February 28 next year, the fund will be managed by Steven M. Barry, who is the chief investment officer of fundamental equity and growth equity at GSAM.
Barry, who joined GSAM as a portfolio manager in 1999, also manages the:
- $2.5 billion Goldman Sachs Growth Opportunities fund
- $2.3 billion Goldman Sachs Small/Mid Cap Growth fund
- $961.9 million Goldman Sachs Capital Growth fund
- $472.5 million Goldman Sachs Technology Opportunities fund
- $273.4 million Goldman Sachs Strategic Growth fund
- $154.6 million Goldman Sachs Concentrated Growth fund
- $19.5 million Goldman Sachs Flexible Cap fund
- $5.9 million Goldman Sachs Blue Chip fund
In the small-cap space, GSAM has the $310.5 million Goldman Sachs Small Cap Equity Insights fund, which is currently co-managed by a trio of Citywire A-rated managers Len Ioffe, Osman Ali and Dennis Walsh.
It has returned 38.6% over the past three years until the end of November and ranks 59 out of 247 Small-Cap Core funds tracked by Citywire.
Co-managed by Barry, Daniel Zimmerman and Michael DeSantis, the Goldman Sachs Small/Mid Cap Growth fund has returned 28.8% over the past three years until the end of November and ranks 55 out of 95 Mid-Cap Growth funds tracked by Citywire.
In addition, the firm has the $7 billion Goldman Sachs Small Cap Value fund and the $124.3 million Goldman Sachs Small/Mid Cap Value fund, both managed by Sally Pope Davis, Robert Crystal and Sean A. Butkus.
A GSAM spokeswoman confirmed the content of the filing.