Artemis US Smaller Companies Fund
Q3 2025 update
Source for all information: Artemis as at 29 September 2025, unless otherwise stated.
CAPITAL AT RISK. All financial investments involve taking risk and the value of your investment may go down as well as up. This means your investment is not guaranteed and you may not get back as much as you put in. Any income from the investment is also likely to vary and cannot be guaranteed.
This is a marketing communication. Before making any final investment decisions, and to understand the investment risks involved, refer to the fund prospectus (or in the case of investment trusts, Investor Disclosure Document and Articles of Association), available in English, and KIID/KID, available in English and in your local language depending on local country registration, available in the literature library.
Fund objective
The fund’s objective is to grow capital over a five-year period.
Market review
Global stockmarkets advanced in the third quarter of 20251, but the US’s central bank, the Federal Reserve, cut interest rates after a run of weaker employment data2.
Despite the cuts, Treasury (US government bond) prices remained broadly stable over the period, while gold rallied 17% to a new record and the dollar stabilised after a torrid first half of the year3.
Although the US expanded tariffs (taxes on imports)4, new trade deals with the EU and Japan tempered fears of a wider escalation5. Risks persist, but we believe the broader picture remains one of resilience, with the US continuing to demonstrate relative economic strength.
Performance
Artemis US Smaller Companies returned 12.5% over the quarter, behind its first benchmark, the Russell 2000 index6, which made 14.3%, but ahead of its second benchmark, the IA North America Smaller Companies sector average7, which made 9.3%.
| 2024 | 2023 | 2022 | 2021 | 2020 | |
|---|---|---|---|---|---|
| Artemis US Smaller Companies | 25.0% | 12.7% | -19.4% | 17.7% | 24.6% |
| Russell 2000 NTR (WHT 15%) | 13.5% | 10.3% | -10.4% | 15.9% | 16.3% |
| IA North American Smaller Companies sector average | 13.3% | 10.9% | -12.5% | 17.4% | 24.7% |
Past performance is not a guide to the future.
Source: Lipper Limited I Acc GBP to 30 September 2025. All figures show total returns with dividends and/or income reinvested, net of all charges. Performance does not take account of any costs incurred when investors buy or sell the fund. Returns may vary as a result of currency fluctuations if the investor's currency is different to that of the class. This class may have charges or a hedging approach different from those in the IA sector benchmark. *As at 31 Oct 24 the benchmark changed to Russell 2000 NTR (WHT 15%) GBP. Returns up to 31 Oct 24 reflect those of the Russell 2000 TR
Positives
Bloom Energy, the fuel-to-electricity converter, delivered another record quarter with 20% revenue growth8. Towards the end of July, it was announced Bloom is to provide power to Oracle Cloud Infrastructure data centres in the US9.
Memory chip manufacturer Western Digital saw revenue rise by 30% year-over-year and profit margins expand, buoyed by strong demand from AI (artificial intelligence) servers10.
Comfort Systems, which supplies high-skilled labour for building systems, delivered another record quarter, with revenue up 20%11.
Negatives
Water and wastewater manager Core & Main suffered following a poor quarter and downgraded its growth outlook for 202612. We decided to exit the position and recycle capital into other areas.
Specialty insurer Palomar reported strong sales and profits yet there was some weakness in the growth of its commercial earthquake book13.
Discount gym provider Planet Fitness has experienced members leaving following the 'click-to-cancel' rollout while uncertainty over the pricing of one of its membership packages has weighed on sentiment14.
Profits in barge operator Kirby rose on strong utilisation and double-digit contract repricing, but navigation delays and labour constraints limited upside15, leading management to trim forecasts for the year. We sold out of the position on the more muted outlook.
Purchases
After its share price fell16, we topped up our position in Taser manufacturer Axon over the quarter. We also added to regional bank Western Alliance, investment bank Evercore and building materials supplier TopBuild, all of which we believe should benefit from falling interest rates. We added to Quest Diagnostics, the medical laboratory company.
Sales
In terms of sales, we exited regional bank Pinnacle Financial Partners and reduced our exposure to Mirion Technologies (a provider of radiation monitoring systems), Comfort Systems and Bloom Energy on strong performance.
Outlook
As we enter the last quarter, we think there are many reasons to be positive on the US stockmarket: the consumer appears to be in good shape17, we believe the tax cuts in Donald Trump’s One Big Beautiful Bill Act should boost the economy and further expected reductions in interest rates tend to help riskier assets such as shares (by making safer asset classes such as cash and government bonds look less appealing in comparison).
There is also continued momentum in spending around AI with very little sign of let-up18. We remain vigilant against overexuberance in the stockmarket and are moving investors’ money towards those areas where we see the most attractive risk/reward trade-off. In our view, this discipline should stand us in good stead as we close out the year.
Notes and references
1. Bloomberg to 30 September 2025
2. https://www.ft.com/content/088d3368-bb8b-4ff3-9df7-a7680d4d81b2
3. Bloomberg to 30 September 2025
4. https://www.piie.com/blogs/realtime-economics/2025/trumps-trade-war-timeline-20-date-guide
5. https://www.piie.com/blogs/realtime-economics/2025/trumps-trade-war-timeline-20-date-guide
6. Russell 2000. A widely used indicator of the performance of US smaller companies, which the fund invests in. It acts as a ‘comparator benchmark’ against which the fund’s performance can be compared. Management of the fund is not restricted by this benchmark.
7. IA North American Smaller Companies NR. A group of other asset managers’ funds that invest in similar asset types as this fund, collated by the Investment Association. It acts as a ‘comparator benchmark’ against which the fund’s performance can be compared. Management of the fund is not restricted by this benchmark.
10. https://investor.wdc.com/static-files/13186e61-6895-4f40-aa0c-fc7fe5f698cf
11. https://finance.yahoo.com/news/earnings-watch-comfort-systems-fix-031129544.html
12. https://www.investors.com/news/core-and-main-residential-demand-warning-homebuilder-stocks-cnm/
16. Bloomberg to 30 September
17. https://www.bbc.co.uk/news/articles/cjedze7e95lo
Risks specific to Artemis US Smaller Companies Fund
- Market volatility risk The value of the fund and any income from it can fall or rise because of movements in stockmarkets, currencies and interest rates, each of which can move irrationally and be affected unpredictably by diverse factors, including political and economic events.
- Currency risk The fund’s assets may be priced in currencies other than the fund base currency. Changes in currency exchange rates can therefore affect the fund's value.
- Smaller companies risk Investing in small companies can involve more risk than investing in larger, more established companies. Shares in smaller companies may not be as easy to sell, which can cause difficulty in valuing those shares.
Important information
The intention of Artemis’ ‘investment insights’ articles is to present objective news, information, data and guidance on finance topics drawn from a diverse collection of sources. Content is not intended to provide tax, legal, insurance or investment advice and should not be construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any security or investment by Artemis or any third-party. Potential investors should consider the need for independent financial advice. Any research or analysis has been procured by Artemis for its own use and may be acted on in that connection. The contents of articles are based on sources of information believed to be reliable; however, save to the extent required by applicable law or regulations, no guarantee, warranty or representation is given as to its accuracy or completeness. Any forward-looking statements are based on Artemis’ current opinions, expectations and projections. Articles are provided to you only incidentally, and any opinions expressed are subject to change without notice. The source for all data is Artemis, unless stated otherwise. The value of an investment, and any income from it, can fall as well as rise as a result of market and currency fluctuations and you may not get back the amount originally invested.
