Navigating Market Currents: Resilience and Conviction in Small Cap Investments
Third Quarter 2025 Performance Overview
During the third quarter of 2025, the Davenport Small Cap Focus Fund recorded a modest gain of 2.94%. This performance, however, trailed significantly behind the broader market benchmark, the Russell 2000\u00ae Index, which surged by an impressive 12.39% over the same period. This disparity highlights a challenging quarter for the fund relative to its small-cap peers.
Year-to-Date Financial Trajectory
Looking at the year-to-date figures, the Davenport Small Cap Focus Fund has experienced a decline of approximately 2.93%. In contrast, the Russell 2000\u00ae Index has demonstrated robust growth, achieving a 10.39% gain since the beginning of the year. These figures underscore a period where the fund's strategy has not fully aligned with prevailing market trends.
Strategic Capital Deployment and Return Targets
The fund's approach to capital deployment is carefully balanced, emphasizing both growth and income. It targets investments that promise a 10-12% Return on Invested Capital (ROIC), indicating a disciplined focus on profitability and efficient use of capital. Simultaneously, the fund is committed to a well-supported dividend strategy, currently offering a substantial yield of nearly 7.5%, which appeals to income-focused investors.
Unyielding Conviction in Investment Selections
Despite the recent underperformance in a dynamic market environment, the management team of the Davenport Small Cap Focus Fund expresses strong confidence in its investment methodology. They remain steadfast in their belief in the intrinsic quality and long-term potential of the businesses within their portfolio, viewing the current market conditions as temporary headwinds rather than a reflection of fundamental weaknesses in their chosen companies.