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Small-Mid Cap Quality Value Portfolio

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The KAR Small-Mid Cap Quality Value Portfolio is a domestic small and mid-cap portfolio that invests in high-quality value companies purchased at attractive valuations. It is a high-conviction strategy that utilizes a bottom-up fundamental research approach to identify what we believe are the best companies at the most attractive prices within the high-quality universe.

Highlights
Asset Class
Small-Mid Cap Equity
Primary Index
Russell 2500™ Value Index
Inception Date
January 1, 2008
Holdings Range
25-35
Sector Constraint
Seek broad diversification, but no sector constraints
Non-U.S. Holdings
Up to 20%
Portfolio Turnover
25% - 35%

Top Five Holdings

As of June 30, 2026
Company Percent of equity (%)
RBC Bearings 5.0
Toro 5.0
Jack Henry & Associates 4.3
CACI International 4.3
Zurn Elkay Water Solutions 4.1
Total 22.8

Source: SS&C GWP™ and FactSet Research Systems. Holdings are subject to change. Holdings and weightings are based on a representative portfolio. Individual Investors’ holdings may differ slightly. Numbers may not always add up due to rounding.

Sector Diversification

As of June 30, 2026
KAR Small-Mid Cap Quality Value
Russell 2500TM Value Index
Communication Services
Consumer Discretionary
Consumer Staples
Energy
Financials
Health Care
Industrials
Information Technology
Materials
Real Estate
Utilities
0%
10%
20%
30%
40%
50%
0%
25%
50%

Source: SS&C GWP™ and FactSet Research Systems. Holdings are subject to change. Holdings and weightings are based on a representative portfolio. Individual Investors’ holdings may differ slightly. The sector information represented above is based on GICS sector classifications.

Portfolio Characteristics

As of June 30, 2026
KAR Small-Mid Cap Quality Value Russell 2500™ Value Index
Quality
Return on Equity-Past 5 Years 25.5% 12.3%
Debt/EBITDA* 1.3x 2.5x
Earnings Variability-Past 10 Years 33.1% 72.7%
Growth
Earnings Per Share Growth-Past 5 Years 6.5% 6.4%
Earnings Per Share Growth-Past 10 Years 10.5% 8.7%
Dividend Per Share Growth-Past 5 Years 10.9% 8.4%
Dividend Per Share Growth-Past 10 Years 12.2% 6.5%
Capital Generation--[ROE x (1-Payout)] 18.0% 9.1%
Value
P/E Ratio-Trailing 12 Months 23.0x 27.5x
Dividend Yield† 1.3% 1.8%
Free Cash Flow Yield‡ 5.1% 3.9%
Market Characteristics
$ Weighted Average Market Cap-3 Year Avg $10.8 B $8.8 B
Largest Market Cap-3 Year Avg $26.5 B $44.9 B

*KAR utilizes the interquartile method when calculating Debt/EBITDA. The interquartile method excludes outliers from an aggregate statistic such as weighted average. The interquartile method does not assume that data from the top or bottom of the distribution are outliers—only the extreme ends are excluded—and that it can be applied consistently as a quantitative method for most fundamental characteristics. Debt/EBITDA utilizes net debt for the calculation.

†Dividend yield is a financial ratio that shows how much companies have paid out in dividends in the most recent year relative to their stock price at the end of such year. Dividend yield is being shown here as a characteristic of the stocks held in the portfolio and not to infer how the stocks have or will perform, as dividends are not the only component of the portfolio’s performance. Dividends are subject to change from year-to-year, and the portfolio’s dividend yield could be lower or higher in future years.

‡Free cash flow data is as of March 31, 2026. Prices are as of June 30, 2026. Excludes financials.

Source: SS&C GWP™ and BNY Mellon. This material is deemed supplemental and complements the performance and disclosure on the Disclosure page of the KAR Small-Mid Cap Quality Value fact sheet. Other principal consultant firms may use different algorithms to calculate selected statistics. Estimates are based on certain assumptions and historical information. Returns may be affected by currency fluctuations. Past performance is no guarantee of future results. 

Historical Returns

KAR Small-Mid Cap Quality Value Wrap (gross) KAR Small-Mid Cap Quality Value Wrap (net) Russell 2500™ Value Index
As of June 30, 2026
2nd Quarter 4.29 3.52 18.50
Year to Date 1.72 0.20 24.16
1 Year (0.23) (3.18) 38.54
3 Year 6.63 3.49 19.41
5 Year 2.01 (1.01) 10.28
7 Year 8.07 4.88 12.28
10 Year 9.24 6.03 11.28
Inception* 10.45 7.21 9.42
Annual Returns (%)
2025 (2.42) (5.32) 12.73
2024 11.50 8.22 10.98
2023 18.24 14.78 15.98
2022 (20.01) (22.43) (13.08)
2021 22.18 18.62 27.78
2020 23.53 19.93 4.88
2019 32.48 28.65 23.56
2018 (11.08) (13.74) (12.36)
2017 19.17 15.69 10.36
2016 19.40 15.91 25.20
2015 (0.59) (3.53) (5.49)
2014 8.88 5.68 7.11
2013 36.30 32.37 33.32
2012 11.01 7.75 19.21
2011 7.40 4.24 (3.36)
2010 25.83 22.18 24.82
2009 32.51 28.67 27.68
2008 (18.99) (21.44) (31.99)

*January 1, 2008

Source: SS&C GWP™ and FactSet Research Systems. This material is deemed supplemental and complements the performance and disclosure on the Disclosure page of the KAR Small-Mid Cap Quality Value fact sheet. Returns for the Kayne Anderson Rudnick (“KAR”) composite are final. All periods less than one year are total returns and are not annualized. Composite performance does not represent the performance of any individual client account, which can differ based on factors such as cash flows and different fee arrangements. Attribution results are based on a representative client account using an external returns methodology and may differ from composite performance or the performance of any individual client account. Final performance information for existing client accounts is reflected in account statements, where applicable. Net-of-fee returns reflect an assumed maximum fee of 3.00%, as further described on the Disclosure page of the KAR Small-Mid Cap Quality Value fact sheet. Returns may be affected by currency fluctuations. Past performance is no guarantee of future results.

IMPORTANT RISK CONSIDERATIONS: Equity Securities: The market price of equity securities may be adversely affected by financial market, industry, or issuer-specific events. Focus on a particular style or on small, medium, or large-sized companies may enhance that risk. Limited Number of Investments: Because the portfolio has a limited number of securities, it may be more susceptible to factors adversely affecting its securities than a portfolio with a greater number of securities. Market Volatility: The value of the securities in the portfolio may go up or down in response to the prospects of individual companies and/or general economic conditions. Local, regional, or global events such as war or military conflict, terrorism, pandemic, or recession could impact the portfolio, including hampering the ability of the portfolio’s manager(s) to invest its assets as intended.

Performance Statistics

Inception* to June 30, 2026
KAR Small-Mid Cap Quality Value Wrap (gross) KAR Small-Mid Cap Quality Value Wrap (net) Russell 2500™ Value Index
Alpha 2.16 (0.86) 0.00
Sharpe Ratio 0.52 0.33 0.40
Information Ratio 0.15 (0.32) N/A
Beta 0.83 0.83 1.00
Downside Capture 78.71 83.88 100.00
Tracking Error 7.02 7.02 N/A

*January 1, 2008

Source: SS&C GWP™ and FactSet Research Systems. This material is deemed supplemental and complements the performance and disclosure on the Disclosure page of the KAR Small-Mid Cap Quality Value fact sheet. Returns for the Kayne Anderson Rudnick (“KAR”) composite are final. All periods less than one year are total returns and are not annualized. Composite performance does not represent the performance of any individual client account, which can differ based on factors such as cash flows and different fee arrangements. Attribution results are based on a representative client account using an external returns methodology and may differ from composite performance or the performance of any individual client account. Final performance information for existing client accounts is reflected in account statements, where applicable. Net-of-fee returns reflect an assumed maximum fee of 3.00%, as further described on the Disclosure page of the KAR Small-Mid Cap Quality Value fact sheet. Returns may be affected by currency fluctuations. Past performance is no guarantee of future results.

IMPORTANT RISK CONSIDERATIONS: Equity Securities: The market price of equity securities may be adversely affected by financial market, industry, or issuer-specific events. Focus on a particular style or on small, medium, or large-sized companies may enhance that risk. Limited Number of Investments: Because the portfolio has a limited number of securities, it may be more susceptible to factors adversely affecting its securities than a portfolio with a greater number of securities. Market Volatility: The value of the securities in the portfolio may go up or down in response to the prospects of individual companies and/or general economic conditions. Local, regional, or global events such as war or military conflict, terrorism, pandemic, or recession could impact the portfolio, including hampering the ability of the portfolio’s manager(s) to invest its assets as intended.