|
|
|
|
|
|
|
| September 30, 2011 |
|
|
|
Although the Munder Micro-Cap Equity Fund had a negative absolute return for the third quarter of 2011, it outperformed relative to its Russell Microcap® benchmark. Performance was aided by stock selection in the Fund’s information technology, health care and financials sectors. Stock selection in the industrials and consumer discretionary sectors were the most significant detractors from relative returns. Sector weights modestly detracted from relative strength, due to an underweight in utilities, which outperformed significantly, and an overweight in industrials, which lagged.
Within the technology sector, the Fund’s software and internet service stocks drove performance. Liquidity Services, Inc. (0.9% of the Fund), an online liquidator, was the Fund’s largest contributor to performance as it announced a very accretive acquisition that will enhance its product platform and improve scale. S1 Corp (0.7%) rose as a competitor proposed acquiring S1 Corp for a sizeable premium.
In health care, the Fund’s positions in Caliper Life Sciences, Inc. (0.7%) and Pain Therapeutics, Inc. (0.8%) advanced over 20%. Caliper Life Sciences, a leader in imaging and detection solutions for life sciences research, agreed to be acquired for a premium. Pain Therapeutics rebounded as the company is making progress on manufacturing issues that have delayed regulatory approval of a painkiller that the company is developing. A number of the Fund’s REIT holdings within the financials sectors also helped performance as the group benefited from a strong earnings season and lower interest rates. Associated Estates Realty Corp. (1.0%) and Education Realty Trust, Inc. (1.0%) were the two best performing REITs as fundamentals within the apartment and student housing segment remain robust.
Stock selection in the Fund’s industrials sector was the largest detractor from relative performance, as global growth concerns negatively impacted the Fund’s holdings. Altra Holdings, Inc. (1.0%) and TriMas Corp. (0.9%), two of the Fund’s best performers during the first half of the year, declined as macro uncertainty is likely to trim near-term growth opportunities for both companies. In the consumer discretionary sector, M/I Homes, Inc. (0.9%), LIN TV Corp (0.5%) and Isle of Capri Casinos, Inc. (0.7%) were the worst performers. M/I Homes, a homebuilder, is suffering from a sluggish demand environment for new housing. Although LIN TV, an operator of television stations, reported solid results, leverage concerns hurt the stock. Isle of Capri declined on a combination of closed casino properties due to flooding from the Mississippi River, higher balance sheet leverage and a challenging environment for consumers. |
|
| March 31, 2011 |
|
|
|
On January 18, 2011, there was a change in the management team for the Munder Micro-Cap Equity Fund and a number of changes were made to the Fund throughout the remainder of the quarter. All of the Fund’s Canadian and Chinese stocks were sold. The Fund’s concentration was reduced by paring down many of the largest holdings and increasing the total number of holdings to 119. The weight of the financials sector was reduced, mainly by selling some of the real estate investment trust (REIT) holdings and trimming the Fund’s payday/pawn shop holdings, which had been strong performers. The sizeable overweight in REITs was reduced because the prospects for higher interest rates and additional supply of REITs make us more cautious. Much of the proceeds from our sales in the financials sector were redeployed in attractively valued consumer discretionary and health care stocks. At the end of the quarter, the Fund was smaller in market cap, and had a slightly lower valuation (measured by price/book, price/sales and price/cash flow), lower growth and slightly more leverage than its pre-January 18th values.
During this transition quarter, the Munder Micro-Cap Equity Fund lagged slightly behind its Russell Microcap® benchmark. The greatest contributions to the Fund’s relative strength came from the health care, financials and utilities sectors, mainly due to stock selection. A higher exposure to momentum was another sizeable positive factor for the quarter. An overweight in industrials, which have continued to perform well as industrial production has hit new highs for this cycle, also had a slight positive impact on performance. In contrast to these positive factors, stock selection in the energy and consumer staples was the largest detractor from the Fund’s relative performance for the quarter. An underweight in the information technology sector and an overweight in financials also had a slight negative impact on relative returns. A lower beta (lower volatility) was another modest negative for the quarter.
The Fund’s energy sector was impacted negatively by Uranium Energy Corp. (1.1% of the Fund), which declined after the Japanese nuclear disaster. China Integrated Energy, Inc. and Pason Systems, Inc. also contributed to the relative weakness of the sector. Both stocks were sold during the repositioning of the Fund.
The relative weakness of the Fund’s consumer staples sector was due in part to Inventure Foods, Inc. (0.7%), a company that produces, markets and distributes salty snack food products and potato chips. The lack of positions in Star Scientific, Inc. and B&G Foods, Inc., which are represented in the Fund’s Russell Microcap® benchmark, also held back the performance of the sector.
Turning to the factors that had a positive impact on the Fund’s performance for the quarter, MWI Veterinary Supply, Inc. (1.0%), a distributor of veterinary products, was the leading contributor to the Fund’s relative strength for the quarter. The company continued to gain market share through accretive acquisitions and improved business momentum. MEDTOX Scientific, Inc. (1.0%) also contributed to the sector’s strength.
The relative performance of the Fund’s financials sector was led by payday/pawn shop and insurance names. Cash America International, Inc. (0.8%) and EZCORP, Inc. (0.7%) rose as they continued to beat earnings estimates and the regulatory scrutiny of payday companies has waned. AMERISAFE, Inc. (1.1%), a property and casualty insurer, advanced as pricing has started to improve. Tri-Tech Holding, Inc., a Chinese stock that was sold as part of the Fund’s repositioning, was the most significant contributor to the relative performance of the Fund’s utilities sector.
Other stocks of note that performed well included The Greenbrier Companies, Inc. (0.9%) and Standex International Corp. (1.2%) in the industrials sector and Koppers Holdings, Inc. (1.0%) in the materials sector. The stock advanced over 18% as its end markets (aluminum and rail road cross ties) are improving. TTM Technologies, Inc. (1.7%) and Diodes, Inc. (1.8%) were strong performers in the Fund’s information technology sector.
We believe the market is turning its attention from bigger picture issues to individual company fundamentals. We will continue to look for companies in the value universe which offer prospects for both top and bottom line growth. Overall, we expect this to be a good year for the market, but not with returns like we have witnessed over the last two years. |
|
| December 31, 2010 |
|
|
|
The Munder Micro-Cap Equity Fund had strong absolute performance for both the fourth quarter of 2010 and for the year as a whole, posting double-digit returns for both time periods. On a relative basis, the Fund performed in line with its Russell Microcap® benchmark for the quarter and lagged just slightly behind its benchmark for the year.
The micro-cap sector of the market had strong performance for the year, reflecting renewed growth in the U.S. economy, a reduction in the risk premiums demanded by investors, and the compelling valuation of micro-cap stocks. The strong correlations among the performance of micro-cap stocks peaked in July, and stock selection became increasingly important as the fundamentals of individual stocks received more attention from investors in the second half of 2010. In general, higher growth and higher risk stocks drove performance during the latter half of the year, while the stocks of more conservative companies with stable growth lagged. The best performing sector of the Fund during 2010 was health care, with performance driven by stocks with impressive earnings, including SXC Health Solutions Corp. (0.8% of the Fund), Neogen Corp. (1.0%), MWI Veterinary Supply, Inc. (1.0%), MEDTOX Scientific Inc. (0.8%) and Health Grades, Inc. Health Grades, which was acquired by Mountain Acquisition Holdings during the fourth quarter, was eliminated from the Fund in September.
As is usually the case with micro-cap stocks, the fundamentals of individual stocks had a greater influence on performance in 2010 than macro factors. Among the stocks that had the largest positive impact on the Fund’s relative performance were a number of the Fund’s financial holdings, including Bank of the Ozarks (1.3%), Meadowbrook Insurance Group (1.9%), EZCORP, Inc. NV (2.2%), Hersha Hospitality Trust (1.5%) and Resource Capital Corp. (1.5%). Both Hersha Hospitality and Resource Capital are real estate investment trusts (REITs). Strong contributors from other sectors included Zagg, Inc. (1.4%) in the materials sector, two energy stocks including Kodiak Oil & Gas Corporation (1.1%) and Mitchum Industries, Inc. (2.0%) and three stocks in the information technology sector including Fabrinet (1.0%), Computer Modelling Group Ltd. (1.8%) and Smith Micro Software, Inc. (2.4%). Two stocks in the industrials sector, Middleby Corp. (1.7%) and TriMas Corporation (1.4%), also made a significant contribution to the Fund’s relative performance. Partially offsetting these strong performers were a few stocks whose fundamentals were disappointing. Orion Marine Group, Inc. (1.3%) was the biggest detractor from the Fund’s relative performance as infrastructure contracts were delayed and earnings reduced. The other major disappointment was TeleCommunications, Systems, Inc., which was eliminated from the Fund in August.
We anticipate that 2011 will be another good year for micro-cap stocks, which tend to have strong relative performance when the economy is in growth mode. We believe that the year ahead will be a stock picker’s market, with earnings growth driving performance. |
|
Past performance does not guarantee future results. There can be no guarantee that any strategy (risk management or otherwise) will be successful. All investing involves risk, including potential loss of principal. The Fund's investment objectives, risks, charges and expenses must be considered carefully before investing. The prospectus and summary prospectus contain this and other important information about the Fund. To obtain a prospectus and summary prospectus, click here. Read the prospectus and summary prospectuses carefully before investing.
RISKS: The Fund invests in smaller company stocks, which are more volatile and less liquid than larger, more established company securities. Further, value-based investments are subject to the risk that the broad market may not recognize their intrinsic value. The Fund may invest up to 25% of its assets in foreign securities, which involve additional risks due to currency fluctuations, economic and political conditions, and differences in financial reporting standards. Performance and after-tax returns can be significantly impacted by the Fund's investments in Initial Public Offerings (IPOs), which may involve short-term trading. We cannot, however, ensure that the Fund will obtain IPOs.
Fund holdings mentioned in the Quarterly Commentary are as of 12.31.11 and the percentages shown are based on net assets as of that date. Fund holdings are subject to change and should not be considered purchase recommendations. There is no assurance that the securities mentioned remain in the Fund’s portfolio or that securities sold have not been repurchased. The The most currently available data regarding portfolio holdings can be found on our website, www.munder.com.
The Russell Microcap® Index is a capitalization-weighted index that measures the performance of the smallest 1,000 companies in the Russell 2000® Index, plus the next 1,000 smallest companies. The Russell 2000® Index is a capitalization-weighted index that measures the performance of the smallest 2,000 companies in the Russell 3000® Index, an index representing approximately 98% of the investable U.S. equity market. You cannot invest directly in an index, securities in the Fund will not match those in the index, and performance of the Fund will differ. Although reinvestment of dividend and interest payments is assumed, no expenses are netted against an index’s returns.
Munder Funds are distributed by Funds Distributor, LLC 01.12
|
| Munder Funds distributed by Funds Distributor, LLC. |
|
|
Mutual Funds |
Investment Professionals |
Retirement Services |