Union Small Cap Fund Direct Growth INF582M01BU9

Union Small Cap Fund earns an Average Process Pillar rating.

The main driver of the rating is the firm's retention rate of the firm's portfolio managers, which is 83% over the available data period, up to five years. The size of the portfolio management team also supports the process. With two portfolio managers, the fund is reasonably well-resourced. However, the process is limited by the fund's mediocre long-term risk-adjusted performance. This can be seen in its 10-year alpha calculated relative to the category average, which suggests that the process has struggled over that period.

This strategy owns more growth stocks than its peers in the Small-Cap Morningstar Category. But in terms of size exposure, it does not have much of a bias and resembles the typical portfolio. Analyzing additional factors, this strategy has consistently had less exposure to yield compared with its Morningstar Category peers during recent years. This is demonstrated by the portfolio's low exposure to dividends or buybacks. While companies with high yields provide steady income payments, they may cut payouts if their earnings fall. In the latest month, the strategy was also less exposed to the Yield factor compared with Morningstar Category peers. This strategy also has had an overweight bias to the volatility factor over these years, meaning it has owned companies that have a higher historical standard deviation of returns. Such stocks tend to rise faster and fall harder than the broad market. High-volatility exposure contributes to stronger performance during bull markets, but often at the cost of losing more during downturns. Compared with category peers, the strategy also had more exposure to the Volatility factor in the most recent month. Additionally, the strategy has constantly maintained a defensive tilt, with exposure to high-quality stocks. Though it may trail peers during an economic boom, this orientation contributes to helping it weather periods of economic stress better. In this month, the strategy also had more exposure to the Quality factor over its peers. More information on a fund and its respective category's factor exposure can be found in the Factor Profile module within the Portfolio section.

The portfolio is overweight in industrials and technology relative to the category average by 5.2 and 3.6 percentage points, respectively. The sectors with low exposure compared with category peers are consumer defensive and financial services, underweight the average by 4.5 and 2.8 percentage points of assets, respectively. The portfolio is composed of 72 holdings and is relatively concentrated. In particular, 26.2% of the fund’s assets are housed within the top 10 holdings, as opposed to the typical peer's 17.1%.