Wooden Daruma turned on a lathe
Notes to Performance
Daruma Asset Management, Inc. is an independent investment advisor registered under the Investment Advisors Act of 1940. Located in New York City, it was founded in 1995 by Mariko O. Gordon, CFA, Founder and Chief Executive Officer. Daruma provides investment management services to public and corporate pension funds, endowments, foundations, other nonprofit organizations and individuals.
The investment strategy of Daruma’s small-cap composite emphasizes long-term growth by buying companies at a value price with accelerating earnings. Daruma manages a concentrated portfolio of typically no less than 25 and no more than 35 stocks, and primarily invests in companies with a market capitalization up to $2 billion at purchase. The benchmark that best reflects the composite’s investment style is the Russell 2000 Index (the “Index”). This index represents the bottom two-thirds of the largest 3000 publicly traded companies domiciled in the United States. It is rebalanced annually in June. The Index performance is provided directly to Daruma by the Russell Investment Group each month and reflects the reinvestment of dividends, but does not reflect fees, brokerage commissions or other investment expenses.
The gross performance results of Daruma’s small-cap composite are presented after all trading commissions but before management and custodial fees. Net-of-fees composite results are calculated by subtracting the management fees paid in addition to trading expenses, but do not include custodial fees paid by clients. A client’s return will be reduced by all expenses incurred in managing the account. The fee schedule for separately managed accounts is 1.00% per annum of the assets under management, payable quarterly. Fees are negotiable on amounts over $40 million.
Past performance does not guarantee future results, and there is the possibility of loss of value. Investment results are time-weighted performance calculations representing total return. Returns are calculated using geometric linking of monthly returns. Composites are valued monthly taking into account cash flows, and portfolio returns are asset weighted by using beginning-of-the-month values. All realized and unrealized gains and losses as well as all dividends and interest from investments and cash balances are included. Investment transactions are accounted for on a trade-date basis. Portfolios are included in the composite, beginning with the first full period of performance to the present or to the last full performance period prior to the end of the client’s relationship with Daruma. Composite valuations and returns are calculated and stated in U.S. dollars. The performance period is monthly. Additional information regarding Daruma’s policies for calculating and reporting returns is available upon request.
The dispersion of annual returns is measured by the standard deviation across asset-weighted portfolio returns represented within the composite for the full year. There is no minimum account size for this composite. All of the firm’s discretionary, fee-paying clients using its small-cap strategy are included in the composite, except for any new accounts that have not yet entered the composite. Daruma’s small-cap composite was created in July 1995. A complete list and description of Daruma’s composites is available upon request.
Daruma Asset Management, Inc. has prepared and presented this report in compliance with the Global Investment Performance Standards (GIPS®).
Small-Cap Equity Composite
Since Inception July 28, 1995 through December 31, 2007
Period |
Total Gross Return (%) |
Total Net Return (%) |
Russell 2000 Return (%) |
Number of Portfolios |
Dispersion (%) |
Total Composite Assets ($ millions) |
Percentage of Firm’s Assets |
Total Firm Assets ($ millions) |
1995 |
12.23 |
12.04 |
6.31 |
1 |
- |
2 |
100 |
2 |
1996 |
24.22 |
23.09 |
16.49 |
1 |
- |
2 |
7 |
29 |
1997 |
42.49 |
41.85 |
22.36 |
3 |
1.41 |
21 |
37 |
57 |
1998 |
16.50 |
15.81 |
-2.55 |
7 |
0.74 |
111 |
51 |
220 |
1999 |
4.24 |
3.64 |
21.26 |
21 |
0.77 |
290 |
75 |
387 |
2000 |
19.22 |
18.52 |
-3.02 |
49 |
1.40 |
679 |
95 |
715 |
2001 |
16.58 |
15.81 |
2.49 |
50 |
0.54 |
799 |
97 |
820 |
2002 |
-21.83 |
-22.41 |
-20.48 |
53 |
0.64 |
659 |
98 |
673 |
2003 |
36.74 |
35.84 |
47.25 |
63 |
1.38 |
902 |
100 |
902 |
2004 |
23.47 |
22.65 |
18.33 |
54 |
0.67 |
933 |
100 |
933 |
2005 |
10.93 |
10.16 |
4.55 |
54 |
0.46 |
990 |
100 |
994 |
2006 |
13.55 |
12.81 |
18.37 |
58 |
0.32 |
1085 |
100 |
1090 |
2007 |
13.06 |
12.35 |
-1.57 |
54 |
0.41 |
1185 |
100 |
1185 |
© 2008-2009 Daruma Asset Management, Inc.