Active Equities

Small Cap Growth Fund (Class Y)  (PSYGX)

Uncovering high-quality and fast-growing small-cap companies

Small Cap Growth Fund received an  Overall Morningstar Rating  of  

The portfolio is diversified across two primary types of small company stocks: high-quality growth and aggressive growth. This portfolio offers growth with a more moderate level of volatility that may be compelling for retirement investors.

HIGH-QUALITY GROWTH COMPANIES

60% to 80% of the portfolio

The largest portion of the portfolio consists of stable, well-established growth companies we believe to be mispriced by the market.

The small-cap asset class can be volatile, especially when targeting the fastest-growing companies. To help moderate the fund's volatility over time, we invest a majority of assets in stable, well-established companies that are often less volatile than the asset class as a whole. We believe these companies can grow at high rates, and that the market is not pricing in their full profitability potential.

Stock example:

This is a California-based retailer of work boots, western footwear, and apparel for men and women. The company's mix of both essential items and more discretionary goods that are difficult to purchase online has contributed to the company's growth. This growth continued through the Covid-19 pandemic, and the company has emerged as an even stronger retailer, in our view. Its store-level return profile is robust, which allows the company to internally fund an accelerating store-opening plan.

AGGRESSIVE GROWTH COMPANIES

20% to 40% of the portfolio

A smaller portion of the portfolio is invested in emerging growth and cyclical growth companies. We define emerging growth companies as those that offer disruptive products, services, or technology that will enable them to grow rapidly. They are typically early in their life cycles, and their quality metrics, such as return on capital or margins, may look weak today. However, if they grow at the rates we are projecting, they could mature into high-quality growth leaders. We put less emphasis on cyclical growth companies, but we will own them if we believe they are competitively positioned and offer durable growth prospects.

Stock example:

Tenable is a leader in vulnerability management — an increasingly critical component of cyber security. Tenable's high level of focus has enabled it to provide a broader view of its clients' vulnerabilities, examining areas beyond the physical footprint of a business. This is necessary as businesses shift to mobile workforces and the cloud. This is a complicated endeavor for businesses, and Tenable can offer answers and help security personnel prioritize remedies.

Highlights

Objective

The fund seeks capital appreciation.

Strategy and process

  • Combining quality and aggressive growthWe believe portfolios that balance exposure to high-quality and aggressive growth small-cap stocks can offer strong risk-adjusted return potential.
  • Research-intensive processOur fundamental investment process focuses on identifying growth opportunities where the market has undervalued the duration or magnitude of a company's growth potential.
  • Long-term investment horizonWe seek to invest over a multiyear horizon to harness the power of compounding growth and embed risk management at multiple levels.

Fund price and assets

Prior close 52-week high 52-week low Net assets and outstanding shares
Net asset value $52.93
0.25% | $0.13
$62.29
03/29/22
$47.30
06/16/22
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Net assets and outstanding shares

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Fund facts as of 02/28/23

Total net assets
$926.80M
Turnover (fiscal year end)
39%
Dividend frequency
Annually
Number of holdings
92
Fiscal year-end
June
CUSIP / Fund code
746763499 / 1852
Inception date
11/03/03
Category
Growth
Open to new investors
Ticker
PSYGX

Management team

Portfolio Manager

Literature


We believe BDCs are built to deliver dividends in a recession
We believe stocks of business development companies have evolved to better withstand a recession, and their dividends can remain at highly attractive levels.
ESG: Hearing the signal above the noise
In our view, the best opportunities lie not at the extremes of ESG rhetoric, but at the heart of sustainability substance.
Look beyond dividends for income from value investing
To build a value investment strategy, consider dividends in the context of overall income.

Performance

Consistency of positive performance over five years

Performance represents 5-year returns in rolling quarter-end periods since inception.

Performance shown above does not reflect the effects of any sales charges. Note that returns of 0.00% are counted as positive periods. For complete fund performance, please see below.

25.04%

Best 5-year annualized return

(for period ending 03/31/14)


-8.37%

Worst 5-year annualized return

(for period ending 03/31/09)


9.29%

Average 5-year annualized return


  • Total return (%) as of 12/31/22

  • Annual performance as of 12/31/22

Annualized Total return (%) as of 12/31/22

Annualized performance 1 yr. 3 yrs. 5 yrs. 10 yrs.
Before sales charge -27.92% 6.87% 10.47% 12.26%
After sales charge N/A N/A N/A N/A
Russell 2000 Growth Index -26.36%0.65%3.51%9.20%

Current performance may be lower or higher than the quoted past performance, which cannot guarantee future results. Share price, principal value, and return will vary, and you may have a gain or loss when you sell your shares. Performance assumes reinvestment of distributions and does not account for taxes. The "before sales charge" performance does not reflect the current maximum sales charges, which we explain below. If performance did reflect the charges, it would be lower. The "after sales charge" performance (or returns at public offering price) varies by share class and fund. For class A and class M shares, the current maximum initial sales charges are 5.75% and 3.50% for equity funds and 4.00% and 3.25% for income funds, respectively (with these exceptions: 2.25% for class A of Floating Rate Income Fund, Short-Term Municipal Income Fund, Short Duration Bond Fund, and Strategic Intermediate Municipal Fund). Class B share performance reflects the applicable contingent deferred sales charge (CDSC), which is 5% in the first year, declines to 1% in the sixth year, and is eliminated thereafter (except for Floating Rate Income Fund and Short Duration Bond Fund; for these funds, the CDSC is 1% in the first year, declines to 0.5% in the second year, and is eliminated thereafter). Class C share performance reflects a 1% CDSC the first year that is eliminated thereafter. Performance for class B, C, M, N, R, and Y shares prior to their inception is derived from the historical performance of class A shares by adjusting for the applicable sales charge (or CDSC) and, except for class Y shares, the higher operating expenses for such shares (note, for two funds - Tax-Free High Yield Fund and Strategic Intermediate Municipal Fund performance prior to inception is based on the historical performance of class B shares). Performance for class A, C, R6, and Y shares of Mortgage Opportunities Fund before their inception is derived from the historical performance of class I shares, which has been adjusted for the applicable sales charge (or CDSC) and the higher operating expenses for such shares. The "after sales charge" performance (at public offering price) for class N shares reflects the current maximum initial sales charge of 1.50%. Class R, R3, R4, R5, and R6 shares, which are available to qualified employee-benefit plans only, are sold without an initial sales charge and have no CDSC. Class Y shares are generally only available for corporate and institutional clients and have no initial sales charge. Performance for class R3 and R4 shares prior to their inception is derived from the historical performance of class Y shares by adjusting for the higher operating expenses for such shares. Performance for class R5 shares before their inception is derived from the historical performance of class Y shares, which has not been adjusted for the lower expenses; had it been adjusted, performance would be higher (with the exception of the Sustainable Retirement Maturity, 2025, 2030, 2035, and 2040 Funds, for which performance is derived from the historical performance of class R6 shares and has been adjusted for the higher operating expenses for such shares; and the Sustainable Retirement 2045, 2050, 2055, and 2060 Funds, for which performance is derived from the historical performance of class R6 shares and has not been adjusted for the lower expenses; had it been adjusted, performance would be higher). Performance for class R6 shares before their inception is derived from the historical performance of class Y shares, which has not been adjusted for the lower operating expenses; had it been adjusted, performance would be higher. For a portion of the period, some funds had expenses limitations or had been sold on a limited basis with limited assets and expenses. Had these limits not been in place, performance would be lower.

Performance snapshot

  Before sales charge After sales charge
1 mt. as of 02/28/23 0.91% -
YTD as of 03/23/23 or prior close 2.58% -

Risk-adjusted performance as of 02/28/23

Alpha (3 yrs.) 4.74
Sharpe ratio (3 yrs.) 0.40
Treynor ratio (3 yrs.) 11.01
Information ratio (3 yrs.) 0.56

Volatility as of 02/28/23

Standard deviation (3 yrs.) 24.56%
Beta 0.89
R-squared 0.92

Capture ratio as of 02/28/23

Up-market (3 yrs.) 97.33
Down-market (3 yrs.) 85.32

Lipper rankings as of 02/28/23

Time period Rank/Funds in category Percentile ranking
1 yr. 345/712 49%
3 yrs. 219/677 33%
5 yrs. 34/628 6%
10 yrs. 33/459 8%
Lipper category: Small-Cap Growth Funds

Morningstar Ratings as of 02/28/23

Time period Funds in category Morningstar Rating
Overall 574
3 yrs. 574
5 yrs. 528
10 yrs. 399
Morningstar category: Small Growth

Lipper rankings are based on total return without sales charge relative to all share classes of funds with similar objectives as determined by Lipper. Past performance is not indicative of future results.

Morningstar Ratings for the specific share classes only; other classes may have different performance characteristics.

The Morningstar Rating™ for funds, or "star rating", is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a 3-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The Morningstar Rating does not include any adjustment for sales loads. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its 3-, 5-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% 3-year rating for 36–59 months of total returns, 60% 5-year rating/40% 3-year rating for 60–119 months of total returns, and 50% 10-year rating/30% 5-year rating/20% 3-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent 3-year period actually has the greatest impact because it is included in all three rating periods.

Some of Morningstar's proprietary calculations, including the Morningstar Rating™, are not customarily calculated based on adjusted historical returns. However, for new share classes/channels, Morningstar may calculate an extended performance Morningstar Rating that is based, in part, on adjusted historical (or "pre-inception") returns for periods prior to the inception of the share class of the fund shown herein ("Report Share Class").

The extended performance is calculated by creating a performance stream consisting of the Report Share Class and older share class(s). Morningstar adjusts the historical total returns of the older share class(es) of a fund to reflect higher expenses in the Report Share Class. Morningstar does not hypothetically adjust returns upwards for lower expenses.

The extended performance Morningstar Risk-Adjusted Return is then calculated for 3-, 5-, and 10-year time periods and used to determine the extended performance Morningstar Rating. The extended performance Morningstar Rating for this fund does not affect the retail fund data published by Morningstar, as the bell curve distribution on which the ratings are based includes only funds with actual returns. The Overall Morningstar Rating for multi-share open-end funds will be either based on actual performance only or extended performance only. Once the share class turns three years old, the Overall Morningstar Rating will be based on actual ratings only. The Overall Morningstar Rating for multi-share variable annuities is based on a weighted average of any ratings that are available.

While the inclusion of pre-inception data, in the form of extended performance, can provide valuable insight into the probable long-term behavior of newer share classes of a fund, investors should be aware that an adjusted historical return can only provide an approximation of that behavior. For example, the fee structures of a retail share class will vary from that of an institutional share class, as retail shares tend to have higher operating expenses and sales charges. These adjusted historical returns are not actual returns. The underlying investments in the share classes used to calculate the pre-performance string will likely vary from the underlying investments held in the fund after inception. Calculation methodologies utilized by Morningstar may differ from those applied by other entities, including the fund itself.

© 2023 Morningstar. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.

The up-market capture ratio is used to evaluate how well an investment manager performed relative to an index during periods when that index has risen. The ratio is calculated by dividing the manager’s returns by the returns of the index during the up-market, and multiplying that factor by 100. The down-market capture ratio is used to evaluate how well an investment manager performed relative to an index during periods when that index has dropped. The ratio is calculated by dividing the manager’s returns by the returns of the index during the down-market and multiplying that factor by 100.


Holdings

Tfi International 2.63%
Willscot Mobile Mini Holdings Corp 2.52%
Kinsale Capital Group 2.38%
Lantheus Holdings 2.17%
Verra Mobility Corp 1.94%
Five Below 1.92%
Churchill Downs 1.89%
Colliers International Group 1.86%
Boot Barn Holdings 1.79%
Manhattan Associates 1.78%
Top 10 holdings, percent of portfolio 20.87%



Portfolio composition as of 02/28/23

Common stock 97.54%
Cash and net other assets 2.46%

Equity statistics as of 02/28/23

Median market cap $4.39B
Weighted average market cap $5.39B
Price to book 5.31
Price to earnings 22.50

Fund characteristics will vary over time.

Due to rounding, percentages may not equal 100%.

Consider these risks before investing: Investments in small and/or midsize companies increase the risk of greater price fluctuations. Growth stocks may be more susceptible to earnings disappointments, and the market may not favor growth-style investing.

The value of investments in the fund’s portfolio may fall or fail to rise over extended periods of time for a variety of reasons, including general economic, political, or financial market conditions; investor sentiment and market perceptions; government actions; geopolitical events or changes; and factors related to a specific issuer, geography, industry, or sector. These and other factors may lead to increased volatility and reduced liquidity in the fund’s portfolio holdings. These risks are generally greater for small and midsize companies. From time to time, the fund may invest a significant portion of its assets in companies in one or more related industries or sectors, which would make the fund more vulnerable to adverse developments affecting those industries or sectors.

Our investment techniques, analyses, and judgments may not produce the outcome we intend. The investments we select for the fund may not perform as well as other securities that we do not select for the fund. We, or the fund’s other service providers, may experience disruptions or operating errors that could have a negative effect on the fund. You can lose money by investing in the fund.

Sector weightings as of 02/28/23

Industrials 20.79%
Information technology 19.98%
Health care 19.71%
Consumer discretionary 12.66%
Energy 6.74%
Financials 5.50%
Consumer staples 4.25%
Materials 3.19%
Real estate 3.06%
 
Other
4.12%
Cash and net other assets 2.46%
Communication services 1.66%

The unclassified sector (where applicable) includes exchange traded funds and other securities not able to be classified by sector.

Sectors will vary over time.


Expenses

Expense ratio

Class A Class B Class C Class R Class R6 Class Y
Total expense ratio 1.23% 1.98% 1.98% 1.48% 0.85% 0.98%
What you pay 1.23% 1.98% 1.98% 1.48% 0.85% 0.98%

Sales charge

Investment Breakpoint Class A Class B Class C Class R Class R6 Class Y
$0-$49,999 5.75% 0.00% 0.00% -- -- --
$50,000-$99,999 4.50% 0.00% 0.00% -- -- --
$100,000-$249,999 3.50% -- 0.00% -- -- --
$250,000-$499,999 2.50% -- 0.00% -- -- --
$500,000-$999,999 2.00% -- 0.00% -- -- --
$1M-$4M 0.00% -- -- -- -- --
$4M-$50M 0.00% -- -- -- -- --
$50M+ 0.00% -- -- -- -- --

CDSC

  Class A (sales for $1,000,000+) Class B Class C Class R Class R6 Class Y
0 to 9 mts. 1.00% 5.00% 1.00% -- -- --
9 to 12 mts. 1.00% 5.00% 1.00% -- -- --
2 yrs. 0.00% 4.00% 0.00% -- -- --
3 yrs. 0.00% 3.00% 0.00% -- -- --
4 yrs. 0.00% 3.00% 0.00% -- -- --
5 yrs. 0.00% 2.00% 0.00% -- -- --
6 yrs. 0.00% 1.00% 0.00% -- -- --
7+ yrs. 0.00% 0.00% 0.00% -- -- --

The Russell 2000® Growth Index is an unmanaged index of those companies in the small-cap Russell 2000® Index chosen for their growth orientation. You cannot invest directly in an index.

Consider these risks before investing: Investments in small and/or midsize companies increase the risk of greater price fluctuations. Growth stocks may be more susceptible to earnings disappointments, and the market may not favor growth-style investing.

The value of investments in the fund’s portfolio may fall or fail to rise over extended periods of time for a variety of reasons, including general economic, political, or financial market conditions; investor sentiment and market perceptions; government actions; geopolitical events or changes; and factors related to a specific issuer, geography, industry, or sector. These and other factors may lead to increased volatility and reduced liquidity in the fund’s portfolio holdings. These risks are generally greater for small and midsize companies. From time to time, the fund may invest a significant portion of its assets in companies in one or more related industries or sectors, which would make the fund more vulnerable to adverse developments affecting those industries or sectors.

Our investment techniques, analyses, and judgments may not produce the outcome we intend. The investments we select for the fund may not perform as well as other securities that we do not select for the fund. We, or the fund’s other service providers, may experience disruptions or operating errors that could have a negative effect on the fund. You can lose money by investing in the fund.