The Jacob Discovery Fund
Ticker: JMCGX (Class R), JMIGX (Class I)
“The Jacob Discovery Fund is committed in its goal to find under-researched, underappreciated smaller companies with significant growth potential.”
— Darren Chervitz, Portfolio Manager & Head of Research
Read Darren’s exclusive interview with Business Insider about the Jacob Discovery Fund
Our View of Today’s Markets.
Since the Great Recession of 2008, the US stock market has been on a historic bull run, one that has lasted longer and moved higher than most experts predicted was possible.
However, a very large percentage of the gains over the past decade have come from a handful of companies, the largest and fastest-growing companies in the world, signified by the well-known FAANG (Facebook, Apple, Amazon, Netflix, Google) acronym. Those five companies, several of which are now worth more than $1 trillion dollars, now make up an unbelievable 15% of the S&P 500 index.
If you believe those stocks may be due for a breather, or feel they might have a tough time repeating the gains they had this past decade during the next ten years, maybe it's time to stand apart from the crowd and start looking elsewhere for opportunities.
One good place to consider might be at the opposite end of the size spectrum: At the smallest companies in the market, which historically have offered better returns than their large cap brethren but have dramatically underperformed as an investment category over the past several years.*
Our Approach.
Lead Portfolio Manager Darren Chervitz wakes up every morning digging for those unearthed opportunities, under-the-radar companies that are operating in large potential markets with significant secular tailwinds, that enjoy durable competitive advantages which make future share gains more likely, and that boast experienced management teams capable of executing on a sound growth strategy and committed to increasing shareholder value.
Chervitz approaches small cap investing in some ways as if he were running a venture capital fund. He's not very interested in singles and doubles. Small caps by their very nature usually come with plenty of risk and it's inevitable that many will end up as failures, so he wants to make sure the companies he adds to his portfolio have plenty of upside potential.
Remember, almost every company - even a FAANG - once started out as a baby tooth.
Click here to view the holdings for the Jacob Discovery Fund, as of the most recent quarter-end. Portfolio holdings are subject to change and should not be considered recommendations to buy or sell any security.
The S&P 500 a market cap-weighted index based on the market capitalizations of 500 large companies having common stock listed on the NYSE and the Nasdaq. It is not possible to invest directly in an index.
*The dates referenced refer to the period between 2011 - 2019. The smallest capitalization and largest capitalization companies are defined by the Fama/French benchmark portfolios. The Fama/French benchmark portfolios are rebalanced quarterly using two independent sorts, on size (market equity, ME) & book-to-market (the ratio of book equity to market equity, BE/ME). The size breakpoint (which determines the buy range for the Small & Big portfolios) is the median NYSE market equity. The BE/ME breakpoints (which determine the buy range for the Growth, Neutral, & Value portfolios) are the 30th and 70th NYSE percentiles. The Fama/French portfolios formed on size are ME<0 (not used); bottom 30%, middle 40%, top 30%; quintiles; & deciles. The portfolios are constructed at the end of each June using the June market equity & NYSE breakpoints. The portfolios for July of year t to June of t+1 include all NYSE, AMEX, and NASDAQ, stocks for which there is market equity data for June of t.
Opinions expressed as those of the author or fund manager, are subject to change, are not guaranteed and should not be considered recommendations to buy or sell any security and should not be considered investment advice.
Internet Fund performance data current to the most recent month and quarter-end can be obtained by clicking here.
Performance data quoted represents past performance; past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance of the fund may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by calling 888-522-6939. The fund imposes a 2.00% redemption fee on shares held less than 30 days. Performance data does not reflect the redemption fee. If reflected, returns would be lower. The fund imposes neither a maximum sales charge on purchases nor a maximum deferred sales charge.
Peer Group is defined as the funds in the Morningstar Small-Cap Growth Category. Investor Shares (Class R) Expense Ratio: Gross 3.16% Net 2.31%**
*Inception Date: 10/16/2012
**The advisor has contractually agreed to waive fees through January 2, 2022.