The Driehaus International Growth Equities team focuses on investing in non-US companies through the Driehaus International Small Cap Growth strategy. The strategy provides investors with exposure to companies experiencing growth inflections in addition to positive earnings revisions and medium-term (price) momentum, two factors that are positively correlated to alpha generation. The team is led by portfolio managers Dan Burr and David Mouser.
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The strategy seeks to outperform the MSCI AC World ex USA Small Cap Growth Index over full market cycles.
The team employs a growth-oriented investment philosophy focusing on identifying company-specific growth inflection points and exploiting associated marketplace inefficiencies. Our philosophy hinges on a belief that market expectations tend to be ‘anchored’ to historical information and that points of inflection therefore introduce dislocations between market expectations and fundamentals which generate significant alpha capture opportunities. The team combines bottom up fundamental and macro analysis with a nimble and active investment approach to identify inefficiencies and generate a portfolio which uniquely seeks to achieve superior aggregate growth rates as well as superior risk characteristics.
The second quarter saw broadly positive returns from international equites, although the environment was the opposite of the first quarter with underperformance from more cyclically oriented stocks paired with declining sovereign bond yields. Despite concerns over peaking cyclical growth, supply chain disruptions, and perceived central banks hawkishness, corporate earnings were robust enough to drive positive returns.
This month’s commentary examines contributors and detractors from first quarter performance, as well as recent portfolio shifts, in greater detail.