Small-cap stocks delivered a strong rebound in the third quarter of 2025, with the James Small Cap fund gaining 8.34% during the quarter and the S-Network US Equity Small Cap 2000 Index1 gaining 12.62%. The Russell 2000 Index2 advanced 12.39%, while the Russell 2000 Value Index3 gained 12.60%, slightly outpacing the Russell 2000 Growth Index4 which advanced 12.19%. The strong market performance was supported by strong sector performance from Financials, Industrials, Healthcare, and Information Technology.
The rally was driven by attractive valuations relative to large caps, positive earnings revisions, and the Federal Reserve’s rate cut, which historically benefits smaller companies due to their reliance on debt financing. The strong momentum propelled the Russell 2000 Index to new all-time highs.
The broader U.S. market faced significant trade headwinds as tariff rates rose sharply, though partial relief came through reciprocal agreements and postponed measures. Economic data was generally positive, with consumer spending firm, and GDP growth remaining positive. Housing indicators were mixed, and labor market confidence weakened. Artificial intelligence continued as a key investment theme, driving optimism across chipmakers, software providers, and infrastructure names.
How did the James Small Cap Fund (JASCX) perform?
How did the fund perform in the 3rd quarter of 2025?
The James Small Cap fund gained 8.34% during the quarter while the S-Network US Equity Small Cap 2000 Index advanced 12.62%.
What were the biggest sector contributors and detractors for the fund in Q3 of 2025?
The financial and industrial sectors were the two biggest contributors to performance for the 3rd quarter. The two largest detractors were consumer discretionary and communication services.
What were the biggest industry contributors and detractors in Q3 of 2025?
The investment broker and electrical product industries were the top contributors during the quarters. Restaurants struggled during the quarter and led all industries detracting from overall performance.
Which stocks contributed most in Q3 of 2025?
Two of the top contributors for the quarter came from the investment broker industry, Evercore Inc. and Piper Sandler Companies.
How did the fund perform YTD at the sector level for the period ending 9/30/2025?
Year-to-date the fund has posted a gain of 11.69% compared to the S-Network US Equity Small Cap 2000 Index return of 8.57%.
Which holding contributed the most to performance YTD?
Sterling Infrastructure, Inc., is a small cap infrastructure construction company with a focus on transportation, data centers, and distribution warehouses.
Which holding detracted most from performance YTD?
Boise Cascade, Inc. was the holding detracting the most thus far this year. The company manufactures engineered wood products for the housing market.
Looking ahead, the sustainability of gains will hinge on continued earnings growth, clarity around Federal Reserve policy, and broader economic strength. Historically, small caps tend to outperform during economic reacceleration and easing monetary policy, though it remains uncertain whether the current rebound marks the start of a long-term trend or another short-lived rally.
Definitions
- S-Network US Equity Small Cap 2000 Index – A benchmark measuring the performance of 2,000 small U.S. companies across various sectors, designed to represent the small-cap segment of the U.S. equity market using transparent, rules-based selection criteria.
- Russell 2000 Index – Tracks the performance of approximately 2,000 of the smallest companies in the Russell 3000 Index, representing the small-cap segment of the U.S. stock market.
- Russell 2000 Value Index – A subset of the Russell 2000, including companies with lower price-to-book ratios and lower forecasted growth values, representing small-cap “value” stocks.
- Growth (Russell 2000 Growth Index) – Also a subset of the Russell 2000, this index includes companies with higher price-to-book ratios and stronger forecasted growth, representing small-cap “growth” stocks.
Disclosures
You should carefully consider the investment objectives, potential risks, management fees, and charges and expenses of the Fund before investing. The Fund’s prospectus contains this and other information about the Fund, and should be read carefully before investing. You may obtain a current copy of the Fund’s prospectus by calling 1-800-995-2637.
The James Advantage Mutual Funds are distributed by Ultimus Fund Distributors, LLC (Member FINRA/SIPC). Ultimus Fund Distributors, LLC is not affiliated with James Investment Research, Inc.
The performance data quoted represents past performance; past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. The Funds’ current performances may be lower or higher than the performance data quoted. Investors may obtain performance information current to the last month-end, within 7 business days, at www.jamesinvestment.com
For standardized performance and expense information, visit: www.jamesinvestment.com/funds/small-cap/
