1 / 5 Stars
1 1 2 1 4
Zacks Investment Research
5 (Strong Sell)
Standard & Poor's
1 / 5 Stars
#142 in Small Growth
U.S. News evaluated 219 Small Growth Funds. Our list highlights the top-rated funds for long-term investors based on the ratings of leading fund industry researchers.
The fund has returned 13.66 percent over the past year, 4.57 percent over the past three years, 13.56 percent over the past five years, and 6.62 percent over the past decade.
|Trailing Returns||Updated 06.30.2014|
|Year to date||-1.5%|
|3 Years (Annualized)||4.6%|
|5 Years (Annualized)||13.6%|
|10 Years (Annualized)||6.6%|
Needham Small Cap Growth employs a diverse strategy to navigate the often-volatile small-cap market.
As of July 03, 2014, the fund has assets totaling almost $38.87 million invested in 59 different holdings. Its portfolio consists of shares of small companies.
In the difficult market conditions of the past three years, this fund has built quite the reputation for itself. After losing significantly less than the competition in 2008, the fund gained an impressive 41 percent in 2009. As the small-cap rally continued through 2010, so did the fund's outperformance. In compiling these results, Needham has relied on a unique strategy. For starters, the fund is not averse to sector bets and currently has a huge overweight in technology companies (about 70 percent of total assets). The fund also employs a long-short strategy. Shorting is a tactic that allows an investor to profit when a company’s stock price goes down. Manager Chris Retzler says he likes to short companies with management teams that are “notorious for shareholder destruction.” The fund has returned 13.66 percent over the past year and 4.57 percent over the past three years.
The fund launched in 2002, and in its early years struggled to gain traction. In every year between 2004 and 2007, for instance, the fund landed solidly in the bottom half of Morningstar’s small-growth category. In 2004, it underperformed its category by upward of 8 percent. But when Retzler took over in 2008, the fund began to make a dramatic turnaround. The fund has returned 13.56 percent over the past five years and 6.62 percent over the past decade.
Part of Needham’s advantage comes from an extensive research process, which is particularly valuable given that smaller companies are often the most difficult to get an accurate read on. The fund also sets itself apart through its willingness to short companies. Retzler uses shorts as a hedge against volatility. Meanwhile, the fund’s long positions are often in post-IPOs that offer strong growth potential. Relative to other growth managers, Retzler is quite concerned about valuations. “We tend to look for deep value opportunities at a reasonable price,” he says.
Role in Portfolio
This fund could lend support to a well-balanced portfolio.
Chris Retzler has managed the fund since early 2008.
Needham Small Cap Growth Fund has an expense ratio of 1.96 percent.
Like all stock funds, this one comes with some risks. Additionally, small-cap stocks can be more volatile than the broader market.