Over 35 years of growth
1975 Wasatch opens for business, focused on small-cap growth investing for separate accounts
1986 The firm launches its first two mutual funds, Small Cap Growth and Core Growth
1995 Opening of the Wasatch Micro Cap Fund, the firm’s first fund in the micro-cap style
1997 Wasatch enters value investing with its first value fund, Small Cap Value
2001 The firm launches its first fund with an international focus: International Growth
2004 Heritage Growth opens as Wasatch’s first mid-/large- or larger–cap fund
2007 Wasatch acquires the 1st Source Funds, Income Equity, Long/Short, and Income Funds
Over the years, we have expanded products and channels. Our key decision screen for new products has always been based in the following questions: Can we be good at it and will it make our collective team better investors?
The early years: from small cap to value investing
In 1986, after 11 years of small-cap investing for separately managed accounts, we launched our first two small-cap portfolios with the simple desire to open our investment approach to everyone.
By 1995 we had put together a solid long-term track record in the small cap space, and it didn’t take a rocket scientist to see that the same principals that formed Wasatch’s foundation were completely transferable to micro-sized companies. So, in 1995, we launched our first Micro Cap portfolio.
Less intuitive was the launch of our first Value portfolio two years later. We had always been growth managers. We wrestled with this decision for a long time. The root of the idea was that we had a competitive advantage in evaluating the long-term prospects of growth companies when they stumbled (which we refer to as “fallen angels”) because of the deep growth company research that we were already doing. We were frustrated because we saw some fallen angels that we were already familiar with being undervalued relative to their potential, but we couldn’t fill our growth portfolios with companies that weren’t currently growing. The launch of the Small Cap Value fund in 1997 gave us a place to leverage these unique insights. As a result, our value portfolios are often described to be “growthier value.”
Expanding to international and heritage investing
By 2001 we had noticed a dramatic change in globalization, both in the broadening markets and in the competitive set of our companies. It also became increasingly easier to purchase stocks on foreign exchanges. We saw this as a long-term trend and thought that we should be better at evaluating our investment opportunities on a global scale. We created an international team and launched our first fund focused outside of the U.S. in 2001. The collaborative nature of our research team allowed our international learning to easily flow across the broader team, and foreign holdings quickly began showing up in all of our equity portfolios.
At Wasatch, we maintain a tight discipline for the capitalization of the companies we hold in our small cap portfolios. Unfortunately this meant that some of our very best ideas literally grew themselves out of the portfolio. We knew these companies continued to have a great growth runway, but we simply couldn’t keep them in our small cap portfolio due to their now larger size. As a result, we introduced our Heritage portfolio in 2004. Many of the holdings were once part of our small cap funds, and had become “graduates” into our mid and large cap Heritage funds.
We also noticed that during our deep due diligence process in the small and micro cap space that we sometimes found larger competitors that were also quite interesting in their own right (called “research enhancers”). Again we were forced to watch from the sidelines due to their size.
The creation of the Heritage fund allowed us to continue investing in “graduates,” as well as begin picking up some of the most interesting mid-cap “research enhancers.” We believe this approach helps us bring a competitive edge to a more efficient part of the market.
Today, we continue to honor our roots by being steadfast to our repeatable process that allows us to be successful in many investment segments. We hope our efforts to work as a team allow us to exceed your expectations. Every aspect of investing—from picking the stocks to sending out the annual reports—focuses on our founding principles: hard work, discipline, collaboration, candor, and responsibility. Our investment culture thrives in the lives of the people who live it.