We are pleased with the Meridian Growth Fund’s (the “Fund”) outperformance during the quarter, which was driven by our discipline of using fundamental research to identify high-quality growth businesses with predictable and recurring revenues, high returns on capital and attractive risk-reward profiles. We then look to build a durable fund based on these ideas that seeks to manage downside risk in tough, turbulent markets and keeps up with the broader market in bull market environments.
We believe the period from the market’s peak early in March is a good demonstration of this. From the market’s peak in early March, the fund captured just 71% of the market’s downside move, falling 6.5%* as compared to 9.2% for the Russell 2500 Growth to the April low. From that low point the fund was then able to capture 90% of the upside going into the end of the quarter, rising 8.0%* versus the index’s gain of 9.0%. We believe this focus on going down less in down markets can result in long-term outperformance due to the power of compounding. By maintaining discipline and a long-term focus, we welcome increased volatility in the market and believe these short-term gyrations can create opportunities to invest capital. Continue Reading »