Artemis US Smaller Companies Fund
Q4 2025 update
Source for all information: Artemis as at 31 December 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.
Note to investors
On 12 January 2026, the market capitalisation restriction limits for the Artemis US Smaller Companies Fund and Artemis Funds (Lux) – US Smaller Companies were amended1. The funds now commit to principally invest in shares of smaller companies which, when first acquired, have a market value of less than $20bn, previously $10bn.
Market review
During the fourth quarter, the US stockmarket continued to be shaped by political developments: fears of escalating tariffs (a tax on imports) directed at China proved short-lived and there was a partial rollback of those levies applied to synthetic opioid fentanyl2.
Meanwhile, US unemployment rose to a four-year high by November, reinforcing expectations that interest rates would be cut again3. And they were – the Federal Reserve delivered its third consecutive cut in December, equal to a reduction of 75bps since September, which boosted shares late in the quarter4 (lower interest rates are positive for riskier assets such as shares as they make ‘safer’ assets such as cash and government bonds less appealing by comparison).
Performance
Artemis US Smaller Companies returned 5.1% over the quarter, beating the 2.2% made by its first benchmark, the Russell 2000 index5, and 3.6% made by its second benchmark, the IA North America Smaller Companies6 sector.
| 2025 | 2024 | 2023 | 2022 | 2021 | |
|---|---|---|---|---|---|
| Artemis US Smaller Companies | 4.6% | 25.0% | 12.7% | -19.4% | 17.7% |
| Russell 2000 NTR (WHT 15%) GBP* | 4.8% | 13.5% | 10.3% | -10.4% | 15.9% |
| IA North American Smaller Companies | 0.3% | 13.3% | 10.9% | -12.5% | 17.4% |
Past performance is not a guide to the future.
Source: Lipper Limited I Acc GBP to 31 December 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
Coherent: The manufacturer of optical materials and semiconductors has been one of our top contributors recently, primarily driven by increased demand and operational efficiencies across its industrial and datacentre/communications segments7.
Hudbay Minerals: Miner Hudbay’s shares recovered following well-flagged disruptions, including Canadian wildfires and labour strikes in Peru8.
Bloom Energy: The company recently announced that alternative asset manager Brookfield plans to invest up to $5bn in data centre infrastructure, with Bloom being the chosen energy provider9.
Globus Medical: Globus Medical is operating well, communicating effectively with investors and it has signalled that merger and acquisition activity is paused for now10.
Hecla Mining: The precious metals miner (largely silver) benefited from higher prices, with revenue and gross profit rising sharply on increased silver and gold volumes11.
Negatives
Wolverine Worldwide: The footwear company underperformed, partly due to the impact of tariffs12. We sold the position over the quarter.
Axon: The maker of Taser reported lower profit margins13, but we remain confident in the long-term trajectory of the business.
Construction Partners: Despite strong demand in the south and south-west of the US for the road builder’s services, concerns emerged around the costs involved with expanding into new markets14.
Jefferies: We reduced our positioning in light of what we felt to be a more challenged near-term outlook for the bank, but still hold a position.
Activity
We trimmed our exposure to some areas that had performed particularly well, especially companies with exposure to the AI (artificial intelligence) theme. Bloom Energy, Western Digital, Iren, and Coherent all fall into this camp.
We recycled this capital into an eclectic mix of businesses, such as Commercial Metals (steel), Elanco (animal health), First Majestic Silver (silver), First Horizon (regional bank) and Wayfair (household goods).
Outlook
We think the year ahead presents a few interesting themes for those looking at US smaller companies, including a rebound in profit growth15, expected cuts in interest rates16 and the possibility of money moving back into this sector, to which investors have a much lower exposure compared with history17.
We will continue to follow our investment process to alight upon businesses with a favourable risk-reward balance.
Notes and references
3. https://www.bls.gov/news.release/pdf/empsit.pdf
4. https://tradingeconomics.com/united-states/interest-rate
5. 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
6. https://fortune.com/2025/10/21/russell-2000-companies-unprofitable-stock-outperforms-tech-bubble/
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://www.investors.globusmedical.com/financial-information/quarterly-results
12. https://www.bitget.com/asia/news/detail/12560605166144
15. Factset, BofA US Equity & US Quant Strategy
16. https://www.forbes.com/sites/simonmoore/2026/01/13/fed-interest-rate-forecast-for-2026/
17. BofA Global Investment Strategy
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.
