DUSG targets the fastest-growing companies in the small-cap universe, betting that emerging businesses with accelerating revenues and earnings can outpace their larger peers. This fund exists for investors who want concentrated exposure to tomorrow's potential market leaders while they're still small enough to deliver explosive growth.
How It Works
The fund screens for small-caps exhibiting superior revenue growth, earnings acceleration, and improving profit margins relative to their sector peers. Holdings are weighted by a composite growth score rather than market cap, giving more weight to companies with the strongest fundamental momentum. The portfolio rebalances quarterly to capture emerging growth stories while cutting losers that have lost their edge. This systematic approach aims to own the top quintile of small-cap growth stocks at any given time.
Key Features
- Growth-score weighting gives 2-3x exposure to top performers vs market-cap weighted alternatives
- Quarterly rebalancing captures momentum shifts faster than semi-annual competitors
- Screens for both revenue and earnings growth, avoiding unprofitable 'story stocks'
Risks
- Small-cap growth stocks can lose 40-60% in market corrections as investors flee to quality
- High portfolio turnover from quarterly rebalancing creates tax drag in taxable accounts
- Growth screens may load up on overvalued momentum plays right before they crash
Who Should Own This
Built for aggressive investors with 10+ year horizons who can stomach violent swings in pursuit of outsized returns. Works best as a 5-10% satellite position alongside core holdings, not as a primary equity allocation. Particularly suited for tax-advantaged accounts where the high turnover won't trigger capital gains distributions.