Sunday, January 2, 2022

Marquette AIM Small Cap Equity Fund Performance for 2021

The AIM Class of 2022 created over 200 bps of alpha in the Small Cap Equity Fund during 2021

It was another strong year for the student-managers of the AIM Small Cap Equity Fund. The Class of 2022 generated a 17.54% total return for the twelve months ending on 12/31/21. This beat the Russell 2000 (benchmark) return of 15.38% for 2021.


The returns of the Small Cap Fund were below the benchmark during the first half of 2021; however, the performance surged in August and October with strong returns from Healthcare, Real Estate, and Consumer Discretionary holdings.

Only two sectors detracted from the performance - Technology and Energy. The Small Cap Fund had no holdings in the Energy sector during the year and lost 100 bps in overall performance as a result. The students made the decision to avoid any energy holdings - especially those related to fossil fuels. 

Four stocks generated returns in excess of 100% (with two others nearly doubling as well) during 2021. B. Riley Financial and Dick's Sporting Goods were the top performers, followed by Customers Bancorp and two REITs. 

Overall the AIM Small Cap Fund held higher quality stocks, on average, than the Russell 2000 while maintaining a sector neutral positioning (with the exception of Energy). While the average price multiples were higher than average, the underlying fundamentals of the stocks in the AIM Fund were superior to the Russell 2000 average ROA, ROE, and profit margins.

The AIM Small Cap Fund had a slight growth tilt; however, it was not nearly as pronounced as previous years. The portfolio had a beta similar to the Russell 2000 and the alpha generated came from superior stock selection.

Overall the performance of the AIM Small Cap Fund was impressive during 2021 despite the two Covid-19 pandemic waves that cast considerable uncertainty in the markets. The AIM Class of 2022 continued the tradition of generating positive alpha using fundamental analysis techniques.