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Company-Specific Sizzle Drives Returns in 2025
July 1, 2025
Brandon Nelson, CFA
Key Points:
- Calamos Timpani Small Cap Growth Fund and Calamos Timpani SMID Growth Fund surpassed benchmarks and peers during the second quarter, extending strong year-to-date outperformance.
- We are encouraged that the funds’ year-to-date strength has been driven primarily by security selection.
- We don’t need the small-cap asset class to win to find winning stocks, but we always welcome asset-class tailwinds. Valuations and earnings growth expectations suggest that the small-cap asset class is a coiled spring with strong potential for outperformance.
Led by growth stocks, equities rallied across the board during the second quarter, completing the right-hand side of a V-shape rebound that began in late February. The first quarter’s concerns about tariffs, recession, and the trajectory of data center spending all faded as numerous data points suggested initial fears about these issues were perhaps overblown. Small caps lagged large caps by 261 basis points for the quarter (measured by the Russell 2000 Index and Russell 1000 Index, respectively), but came on strong in June, led by micro caps.
It was a tricky market environment, but we navigated it well for both Calamos Timpani Small Cap Growth Fund (CTSIX) and Calamos Timpani SMID Growth Fund (CTIGX). During the quarter, each fund outperformed its respective benchmark and peer group by a wide margin. We saw several individual micro, small, and mid-cap stocks handsomely rewarded following strong earnings reports. The market’s willingness to embrace company-specific fundamental strength is a favorable sign of overall stock market health that should not be overlooked.
CTSIX and CTIGX: Strong Outperformance in Q2 Versus Benchmarks and Peers
Source: Morningstar. Performance data quoted represents past performance, which is no guarantee of future results. Current performance may be lower or higher than the performance quoted. Please refer to Important Risk Information. The principal value and return of an investment will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. Performance reflected at NAV does not include the Funds’ maximum front-end sales load of 4.75%. Had it been included, the Funds’ return would have been lower. All performance shown assumes reinvestment of dividends and capital gains distributions. As of the prospectus dated 2/28/2025, CTSIX’s gross expense ratio is 1.10% and CTIGX’s gross expense ratio is 1.56%.
Regarding company specifics, the chart below provides a high-level breakdown of year-to-date performance for CTSIX. The top portion shows our overall outperformance, and the bottom portion shows the components of that outperformance. It’s encouraging that the primary driver of outperformance comes from idiosyncratic, or company-specific, strength. Through our rigorous research efforts, we pride ourselves on finding company-specific fundamental momentum (sustainably fast and underestimated growth) that doesn’t rely on ideal macro conditions. We believe this chart shows we’ve been pretty good at finding what we are seeking!
CTSIX’s year-to-date performance versus the Russell 2000 Growth Index has been strong.
The chart below shows the components of active return. Idiosyncratic (company-specific) security selection has been the most important contributor to year-to-date results.
Past performance is no guarantee of future results. Source: Calamos Investments using Barra. Data through 6/30/25.
Looking at the small-cap asset class overall, small caps remain extremely inexpensive versus large caps, trading near the lowest level since 2001!* This low valuation exists even though data suggests small-cap earnings are on the verge of a meaningful year-over-year earnings acceleration in Q3 and Q4.
In sum, we believe our funds’ combination of company-specific sizzle and exposure to a potentially coiled-spring asset class makes them quite interesting.
Before investing, carefully consider the fund’s investment objectives, risks, charges and expenses. Please see the prospectus and summary prospectus containing this and other information which can be obtained by calling 1-866-363-9219. Read it carefully before investing.
*Past performance is no guarantee of future results. Relative valuation of small caps to large caps is in the 6th percentile as of May 31, 2025; lower percentiles indicate more favorable relative valuations for small caps. Source: Jefferies, using FactSet, FTSE Russell and Jefferies.
Total Returns as of 06/30/25
| 2Q 2025 | 1 Year | 3 Year | 5 Year | 10 Year | Fund Inception | |
|---|---|---|---|---|---|---|
| CTSIX | 21.48% | 25.69% | 18.51% | 9.95% | 9.99% | 11.81% (3/23/11) |
| Russell 2000 Growth Index | 11.97% | 9.73% | 12.38% | 7.42% | 7.14% | 9.17% |
| CTIGX | 18.33% | 22.70% | 19.20% | 10.32% | — | 10.45% (7/31/19) |
| Russell 2500 Growth Index | 11.31% | 8.81% | 12.04% | 7.50% | — | 7.61% |
Performance data quoted represents past performance, which is no guarantee of future results. Average annual total return measures net investment income and capital gain or loss from portfolio investments as an annualized average. All performance shown assumes reinvestment of dividends and capital gains distributions. Returns of more than one year are annualized
The chart shows the performance of the Predecessor Fund’s Institutional Class, which has been adopted by the Class I shares of the Fund for periods prior to the Reorganization. The information shows you how the Predecessor Fund’s performance has varied year by year and provides some indication of the risks of investing in the Fund. The average annual total return table compares the Predecessor Fund’s Institutional Class performance, adopted by the Fund’s Class I shares, and Class Y performance, adopted by the Fund’s Class A shares and adjusted to reflect the maximum sales load of 4.75%, to that of the Russell 2000 Growth Index. "Since Inception" return shown for the Russell 2000 Growth Index is the return since the inception of the Predecessor Fund’s Class Y shares. An index reflects no deduction for fees, expenses or taxes. To the extent that dividends and distributions have been paid by the Predecessor Fund, the performance information for the Predecessor Fund in the chart and table assumes reinvestment of dividends and distributions. If the Predecessor Fund’s investment adviser had not waived or reimbursed certain Predecessor Fund expenses during these periods, the Predecessor Fund’s returns would have been lower. As always, please note that the Fund’s past performance (before and after taxes) cannot predict how it will perform in the future.
Class I shares are offered primarily for direct investment by investors through certain tax-exempt retirement plans and by institutional clients, provided such plans or clients have assets of at least $1 million. For eligibility requirements and other available share classes see the prospectus and other Fund documents at www.calamos.com.
Opinions, estimates, forecasts, and statements of financial market trends that are based on current market conditions constitute our judgment and are subject to change without notice. The views and strategies described may not be appropriate for all investors. References to specific securities, asset classes and financial markets are for illustrative purposes only and are not intended to be, and should not be interpreted as, recommendations.
Diversification and asset allocation do not guarantee a profit or protect against a loss.
Morningstar Small Growth Category funds focus on faster-growing companies whose shares are at the lower end of the market-capitalization range. Stocks in the bottom 10% of the US equity market’s capitalization are defined as small caps. Growth is defined based on fast growth (high growth rates for earnings, sales, book value, and cash flow) and high valuations (high price ratios and low dividend yields). The Russell 1000® Index measures the performance of the large-cap segment of the US equity universe. The Russell 2000® Index measures the performance of the small-cap segment of the US equity universe. The Russell 2000® Growth Index measures the performance of the small-cap growth segment of the US equity universe. It includes those Russell 2000® companies with higher price-to-value ratios and higher forecasted growth values. The Russell 2500® Growth Index measures the performance of the small to midcap growth segment of the US equity universe. It includes those Russell 2500 companies with higher growth earning potential. Unmanaged index returns, unlike fund returns, do not reflect fees, expenses or sales charges. Investors cannot invest directly in an index.
Active Return: Difference between the benchmark and the portfolio return. Style: The portion of active returns attributable to common factors such as (but not limited to) value, growth, size, beta and momentum. Industry: The portion of active returns attributable to industry membership isolated from the effects of style factors. Idiosyncratic: The portion of active returns attributable to sources not explained by common factors, often referred to as “stock-specific.”
Important Risk Information. An investment in the Fund(s) is subject to risks, and you could lose money on your investment in the Fund(s). There can be no assurance that the Fund(s) will achieve its investment objective. Your investment in the Fund(s) is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. The risks associated with an investment in the Fund(s) can increase during times of significant market volatility. The Fund(s) also has specific principal risks, which are described below. More detailed information regarding these risks can be found in the Fund’s prospectus.
The principal risks of investing in the Calamos Timpani Small Cap Growth Fund and Calamos Timpani SMID Growth Fund include equity securities risk consisting of market prices declining in general, growth stock risk consisting of the potential increased volatility due to securities trading at higher multiples, and portfolio selection risk. The Fund invests in small capitalization companies, which are often more volatile and less liquid than investments in larger companies.
Foreign security risk: As a result of political or economic instability in foreign countries, there can be special risks associated with investing in foreign securities, including fluctuations in currency exchange rates, increased price volatility and difficulty obtaining information. In addition, emerging markets may present additional risk due to potential for greater economic and political instability in less developed countries.
NOT FDIC INSURED | NO BANK GUARANTEE | MAY LOSE VALUE
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