UCITS Offerings
GRANAHAN FUTURE PATHWAYS FUND
The Granahan Future Pathways UCITS Fund follows the same style as GIM's Future Pathways strategy. Our core belief is that as the world embraces a more sustainable future, we anticipate the US SMID Cap universe being filled with many great growth companies that help meet the demand for sustainable clean energy, smarter water management, and reduced waste solutions. We also expect that society will look to the market for answers to these problems, along with ways to improve social outcomes in healthcare, labor, justice, and education. Our interest is in companies that improve the world for future generations. We want Future Pathways to be flexible and adaptable to environmental and social issues as they arise and to rotate where the best opportunities exist for stock appreciation in this universe.
Future Pathways is not constructed based on ESG ratings. Since the US is still in the early innings of prioritizing and applying ESG best practices, there’s no standard measure of social good. It’s obvious when you see it, but it’s not yet reflected appropriately in a global standardized rating system. For that reason, we’ve chosen to map the Future Pathways portfolio to United Nations Sustainable Development Goals (SDG’s) in lieu of providing such things as portfolio level carbon metrics or portfolio level ESG scores that only tell part of the story.
Our focus is on traditional fundamentals while also uncovering the intrinsic value of societal impact. We do this by engaging with what we believe are quality companies that offer products or services to help larger entities, and even individuals, meet their respective environmental and social goals.
Distinguishing Factors
- While we want our holdings to have passing ESG grades, the external social impact is what makes a good sustainable growth company, and ultimately is what will help determine if a stock ends up in the fund.
- We’re engaging directly with companies hands-on to ensure proper governance and risk management protocols are in place.
- We are not activist investors - we are engaged investors. We have found that by investigating companies on our own terms, we are able to achieve the best understanding of fundamentals, intention, potential, and ultimately, a company’s ability to provide positive change.
- Sustainability requires constant innovation, and we believe every industry will be transformed as companies evolve to meet the demands of a net zero world.
GRANAHAN US SMID SELECT FUND
The Granahan US SMID Select Fund follows the same style as GIM's SMID Select strategy. Granahan Investment Management (GIM) believes that smaller dynamic companies provide excellent potential for superior long-term performance. GIM’s SMID Select strategy is grounded in the belief that a disciplined, fundamental, bottom-up research process can identify underappreciated growth potential in companies that may or may not have a history of strong growth. The resulting portfolio has the optimum combination of stocks with underlying thematic growth drivers, and stocks of well-positioned companies that are poised for positive earnings revisions or are benefiting from fundamental/technical momentum. We seek companies that can sustain growth through market disruption. The portfolio focuses on stock selection with an overlay of thematic ideas showing the best risk/reward.
As part of a disciplined portfolio construction process, at GIM, every company in the portfolio is placed into one of three investment categories: Core Growth, Pioneer and Special Situation. These LifeCycle categories each have different performance drivers so provide true diversification and help mitigate risk in the portfolio.
Distinguishing Factors
- Enterprise growth drives a company’s stock price over the long term, while changes in market sentiment can provide opportunity in the short term.
- We believe certain thematic growth drivers can provide sustainable foreseeable compound return potential.
- We believe one can locate growth not only in traditional sectors, but also in unexpected corners of the market where other growth managers rarely venture.
- Only a select number of companies fit our criteria. We believe in having conviction in our analysis and patience in our conviction.
GRANAHAN US FOCUSED GROWTH FUND
The Granahan US Focused Growth Fund follows the same style as GIM’s Focused Growth strategy and is grounded in the belief that superior long-term returns are best achieved through a select portfolio of smaller companies poised to grow at 15% or more. Granahan Investment Management (GIM) believes that small dynamic companies provide excellent potential for superior long-term performance.
Distinguishing Factors
- By investing in businesses with sustainable growth, we reduce the risk of significant capital loss.
- We invest in exceptional businesses –those with solid balance sheets, high incremental margins and strong customer value propositions.
- Our expected return methodology is a mechanism for mispricing and has proven successful over the course of several investment cycles.
- We believe conviction leads to out-performance, 60%-80% portfolio held in top 15 holdings.
Within this philosophy we seek to own companies with large open-ended opportunities, a favorable competitive landscape, products or services providing a significant value proposition to the customer, and that have clean balance sheets.
This company analysis is combined with a rigorous valuation discipline centered on a stock's expected return and risk/reward. The net result is a portfolio of 40-50 attractively priced stocks of some of the most exciting and innovative companies in the economy, and a portfolio that has generated consistent, strong risk-adjusted returns over time.
GRANAHAN US SMALL CAP DISCOVERIES FUND
The Granahan US Small Cap Discoveries Fund is a re-launch of the Vanguard US Discoveries Fund that was closed in May 2017. Like the prior fund, the Granahan US Small Cap Discoveries Fund follows the same style as GIM’s Small Cap Discoveries strategy.
Granahan Investment Management (GIM) believes that small dynamic companies provide excellent potential for superior long-term performance. The Discoveries strategy exploits the inefficiencies in the U.S. small/micro-cap market. This segment of the market produces a skewed distribution of returns where a small but meaningful number of high-performing stocks drive the return of the benchmark. These high-performing stocks range from hyper-growth companies to companies that have sorely disappointed investors in the past.
GIM’s small cap experts use a disciplined, fundamental, bottom-up research process to identify strong earnings growth potential in companies that may or may not have a history of strong growth.
Distinguishing Factors
- Emphasis on high-quality US micro-cap and emerging growth companies; historically, 50% of the portfolio comprises companies with market caps under $500 million.
- High conviction portfolio -- the top 20 names constitute 50% of the portfolio.
- The strategy’s turnover ratio is attractive to taxable investors.
- The GIM Small Cap Discoveries strategy has outperformed its Russell MicroCap Growth benchmark in all but two of its 13 years since inception in 2004.
As part of a disciplined portfolio construction process, every company in the Discoveries portfolio is placed into one of three investment categories: Core Growth, Pioneer and Special Situation. These LifeCycle categories have different performance drivers so provide true diversification and help mitigate risk in the portfolio.
The end result is a portfolio with the optimum combination of emerging growth prospects and stocks of well-positioned companies struggling under negative sentiment that together may achieve excess returns while limiting losses.