FA Magazine May 2024 | Page 47

COLLEGE PLANNING | ESTATE PLANNING | INVESTING | PORTFOLIO SPOTLIGHT | REAL ESTATE | RETIREMENT | TAX PLANNING
Needham Aggressive Growth Fund
TICKER ASSETS
NEAGX $ 664.8 million
PERFORMANCE YTD 1 yr . 3 yr . 5 yr . 10 yr . 15 yr . 18.58 % 55.91 % 15.12 % 25.12 % 15.16 % 16.87 %
TOP 5 HOLDINGS Super Micro Computer Inc .; Aspen Aerogels Inc .; PDF Solutions Inc .; Vertiv Holdings Co .; Unisys Corp .
CONTACT INFO
800-625-7071 • needhamfunds . com
TOP INDUSTRIES ( As a % of portfolio ) Information Technology 40.2 % Cash 22.0 % Industrials 14.9 % Materials 8.4 % Consumer Discretionary 5.9 % Healthcare 4.1 % Consumer Staples 2.3 % Energy 0.9 % Financials 0.7 % Real Estate 0.4 % Communication Services 0.3 %
Performance and asset numbers as of 3 / 31 / 24 . Holdings as of 12 / 31 / 23 . Performance figures are for the retirement share class because its track record begins in 2001 . The institutional share class began trading in 2016 . Sources : Needham & Company and Morningstar .

The Art Of Trouncing An Index

The Needham Aggressive Growth Fund has a knack for finding big winners . By Jeff Schlegel

THE NEEDHAM AGGRESSIVE GROWTH FUND HAS built an impressive track record of index-beating results , but there are a few things about it that might seem contradictory . For starters , as of last year ’ s fourth quarter the fund ’ s largest holding was the most non-aggressive asset class on the planet — cash . And an “ aggressive cash fund ” sounds oxymoronic .

Also , consider the fund ’ s most recent annual report , where portfolio manager John Barr cites Charlie Munger as a big influence on his investment strategy . Munger , who passed away last year at age 99 , was a noted value investor , perhaps best known as Warren Buffett ’ s right-hand man at Berkshire Hathaway . Munger wasn ’ t a poster boy for growth investing . ( A Munger-style growth fund sounds oxymoronic as well .)
Finally , there ’ s the fund ’ s very low 7 % turnover ratio . This , too , belies the image of an aggressive growth fund constantly turning over rocks in search of the next big thing .
Yet all these contradictions make sense within the context of how portfolio manager Barr thinks about investing and portfolio construction .
His fund , which he has managed since 2010 , was recently awarded the 2024 LSEG Lipper Fund Award as the best of its 162 small-cap growth peers during the five-year period ended November 30 , 2023 . And the Needham fund ’ s average annual returns have made it the top-ranked name in Morningstar ’ s small-growth category in every time period from one year to 10 years ( and it was fifth during the 15-year period , which Barr has mostly presided over ).
Barr looks for companies with strong long-term growth potential and disruptive products or services , along with solid management teams . He also likes investing in companies that aren ’ t on Wall Street ’ s radar . In some ways , all of that seems like Growth Investing 101 .
What sets the fund apart is the ability of Barr and Needham ’ s three-member research team to find early-mover companies in emerging business areas that have rapid growth potential . He then
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