Driehaus Capital Management has launched the Driehaus Micro Cap Growth Fund, the successor to the Driehaus Micro Cap Fund and the Driehaus Institutional Micro Cap Fund.
The fund's investment team is led by portfolio manager Jeff James, who joined Driehaus Capital Management in 1997. James has managed the Driehaus Micro Cap Growth strategy for the past 16 years.
James says: "The micro-cap equity universe is a dynamic and underappreciated segment of the equity market. It includes many of the most innovative US companies that have the potential and characteristics for rapid price appreciation. It is also an inefficient market segment as the vast majority of institutional investors and Wall Street sell-side analysts are focused on larger companies."
Since the Driehaus Micro Cap Growth Fund's 1 January 2003 performance inception date, it has outperformed its benchmark, the Russell Microcap Growth Index, across all standard time periods. On a cumulative return basis since its performance inception date, the fund has returned 587 per cent versus 197 per cent for the index and 138 per cent for the S&P 500 Index.
For many investors, the inclusion of a micro-cap fund in their portfolios is a means to maintain a true small cap equity allocation. During the past five years, the US equity market, as measured by the S&P 500 Index, has rallied from a March 2009 closing low of 677 to current near-record highs of almost 1,800. The strong advance has been matched by a similar dramatic increase in companies' market capitalisations. This has elevated many investors' small cap exposure to a weighted average market cap more commonly associated with a small-mid cap portfolio.
"Many of our clients invest in a micro-cap strategy to lower the overall average market cap to a level more consistent with small caps. They often find this also improves diversification while adding exposure to a segment of the US equity market with historically strong performance," says Rob Gordon, president and chief executive of Driehaus.
As a limited partnership, the strategy was previously offered only to institutional and accredited investors.
"What we have heard from our investors is that a mutual fund is the vehicle of choice relative to a limited partnership," says Gordon. "Our client base appreciates the liquidity and transparency of a fund, and the strategy will be more accessible to a broader range of investors."
The Driehaus growth equity investment philosophy was pioneered more than 30 years ago by the firm's founder, Richard H Driehaus. Since then, it has served as the foundation for all of the firm's equity investment strategies. Driehaus has managed micro-cap growth mandates for institutional investors since 1996. As of 31 October 2013, Driehaus had more than USD300m micro-cap strategy assets under management.