Artemis US Smaller Companies Fund
Q1 2026 update
Source for all information: Artemis as at 30 March 2026, unless otherwise stated.
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.
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 amended. 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
The year started strongly, with companies in a range of sectors seeing share price gains during January and February. News about artificial intelligence (AI) spending was a tailwind for many US smaller companies.
This was followed by uncertainty into March, as war in the Middle East drove oil prices higher, prompting renewed concerns around inflation and higher-for-longer interest rates.
Within the Russell 2000 index1, financial services shares, energy and defensive sectors (such as healthcare and consumer staples) outperformed. Higher quality, more profitable businesses also fared well. On the other hand, economically sensitive areas such as materials lagged.
Performance
The fund’s performance for the quarter was flat (0.0%). Due to the timing of pricing, the fund’s return is substantially different from US close of business (COB) numbers because it does not capture the market rally on 31 March. COB numbers show the fund returning 3.8% for the quarter (net of fees). Its first benchmark, the Russell 2000 index, returned 2.9%.
| 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 Companies2 | 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
Beneficiaries of AI data centre spending had a strong quarter, including:
• Applied Optoelectronics, which designs and manufactures fibre-optic networking products for internet and communications infrastructure.
• Coherent, a manufacturer of optical materials and semiconductors.
• Seagate Technology Holdings, which operates in the memory part of the data centre value chain.
• nVent Electric, which provides liquid cooling and other equipment for data centres.
Silver miner First Majestic Silver also performed well following a rally in precious metals at the end of 2025 and into 2026.
Negatives
Shares that underperformed during the quarter included:
• Consumer credit provider Affirm Holdings, which suffered due to economic uncertainty and worries about consumers’ ability to repay their debt3.
• Commercial real estate firm Jones Lang LaSalle and e-commerce company Wayfair, which were both affected by concerns that AI could disrupt their business models4 .
• Life sciences company Repligen, which focuses on bioprocessing (using living cells or their components to make products) technologies.
Activity
We sold silver mining companies First Majestic Silver and Hecla Mining and trimmed our position in copper miner Hudbay Minerals, taking profits following strong performance.
We recycled the proceeds into a range of companies, including freight provider J.B. Hunt Transport, Texas-based regional bank Cullen/Frost Bankers, manufacturer of aerospace engines and airframes ATI and toys and games business Hasbro.
We have more exposure to industrial companies than our benchmark but fewer holdings in the energy, financial and technology sectors. We significantly reduced our allocation to basic materials during the quarter.
Outlook
Looking ahead, we expect a more variable environment for share prices, with periods of stockmarket volatility. US economic growth is resilient, if moderating. But at the same time, inflationary pressures, particularly from energy prices, are likely to influence the path of interest rates.
We will continue to analyse how much we think a company’s share price could rise or fall in various scenarios and to invest in companies with a far greater potential upside than downside.
Notes and references
2. 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.
3. https://finance.yahoo.com/news/affirm-stock-falls-33-ytd-154000590.html
4. https://www.theaiconsultingnetwork.com/blog/ai-scare-trade-cre-investors-2026
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.
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.
