Davenport Small Cap Focus (DSCPX) Clobbers the Broader Market
This small-cap stock fund has roughly doubled from its 2020 lows, but it has been delivering market-beating performance for far longer.


Shares in small companies were already hopping when news of a potential COVID-19 vaccine boosted prices even more. Since bottoming in March 2020, the Russell 2000 Index of small-company stocks is up 100.8% on a total-return basis (price plus dividends), beating the 67.3% rise in the S&P 500 Index from its March low.
Davenport Small Cap Focus (DSCPX, $18.22) did even better, with a 101.6% return.
Managers Chris Pearson and George Smith keep a trim portfolio of 33 small, little-known firms that generate robust cash flow and are run by executives with a proven ability to reinvest the cash wisely. The average market value of holdings in the portfolio is $2.2 billion.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.

Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The managers favor firms run by founders or executives with big stakes in their company. The Fahari family, founders of Monarch Casino & Resort (MCRI, which includes Atlantis Casino Resort Spa in Reno, Nevada), own 34% of the company’s stock. When shares plunged 66% in early 2020, Smith and Pearson added to their stake in the casino company at low prices of $13 to $14 a share.
“They have arguably the best balance sheet in the industry,” says Smith.
Shares have nearly quadrupled since then.
Other top holdings in DSCPX include investment firm Cannae Holdings (CNNE) and Evoqua Water Technologies (AQUA), which provides cleanwater services and systems.
Smith and Pearson think of themselves as owners of businesses, not stock pickers. That’s the culture of Davenport & Co., the 157-year-old money management firm behind the fund. They are not restricted by rules on sector exposure or about whether to favor value or growth characteristics. But they keep a keen eye on risk. That’s one reason the fund is light on tech and health care names.
“In the world of small-cap tech and health care, risk rises significantly,” says Smith. “And a big part of our M.O. is to produce good returns with below-average risk.”
Both managers practice what they preach and have significant personal money in the fund.
“We invest alongside our investors and clients,” says Pearson.
That has worked for everyone so far. Over the past five years, Small Cap Focus’s 18.0% annualized return has beaten 99% of its peers (funds that invest in a mix of stocks with growth and value characteristics). That has topped the Russell 2000 and S&P 500, too.
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Nellie joined Kiplinger in August 2011 after a seven-year stint in Hong Kong. There, she worked for the Wall Street Journal Asia, where as lifestyle editor, she launched and edited Scene Asia, an online guide to food, wine, entertainment and the arts in Asia. Prior to that, she was an editor at Weekend Journal, the Friday lifestyle section of the Wall Street Journal Asia. Kiplinger isn't Nellie's first foray into personal finance: She has also worked at SmartMoney (rising from fact-checker to senior writer), and she was a senior editor at Money.
-
Planning a Major Home Renovation? 3 Smart Ways to Finance It
From HELOCs to personal loans, here’s how to pay for a major home renovation without draining your savings.
-
Six Warren Buffett Quotes Every Retiree Should Live By
The 'Oracle of Omaha' knows a thing or two about life, investing and retirement.
-
Stocks Rise to End a Volatile Week: Stock Market Today
The market's fear index reached and retreated from a six-month intraday peak on Friday as stocks closed the week well.
-
Dow Sinks 301 Points on Trade War Talk: Stock Market Today
The contentious relationship between the world's two biggest economies continues to drive global financial markets.
-
Trade Uncertainty Sparks Whipsaw Session: Stock Market Today
Volatility is making a cameo here in mid-October, a generally positive month marked by its historic stock market events.
-
Stocks Swing in Volatile Session: Stock Market Today
The main indexes fell sharply in early trading on rising China tensions, but rebounded thanks to encouraging bank earnings.
-
Dow Adds 587 Points as Stocks Bounce: Stock Market Today
The main indexes rebounded sharply Monday after President Trump took a calmer stance toward China.
-
Dow Dives 878 Points on Trump's China Warning: Stock Market Today
The main indexes erased early gains after President Trump said China is becoming "hostile" and threatened to cancel a meeting with President Xi.
-
Stocks Retreat as Shutdown Continues: Stock Market Today
While the main indexes closed lower today, Delta and PepsiCo gained ground on encouraging earnings reports.
-
S&P 500 Hits New Highs as Rally Resumes: Stock Market Today
Tech stocks were the biggest gainers on Wall Street today, with Nvidia and Dell making notable moves.