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Top-Notch Timpani Performance in 2025, Superb Small-Cap Set-Up in 2026
January 2, 2026
Brandon Nelson, CFA
Summary Points:
- Capping a year of significant outperformance, Calamos Timpani Small Cap Growth Fund (CTSIX) and Calamos Timpani SMID Growth Fund (CTIGX) surpassed their peer group average and benchmarks during the fourth quarter.
- The funds’ 2025 performance was especially noteworthy given the headwinds most small-cap growth and SMID-cap growth funds faced.
- We believe these gains—as well as the funds’ longer-term records—demonstrate the power of our security selection, and our fundamental-momentum investment style.
- We believe microcaps, small caps, and mid caps may be poised for a performance rebound relative to large caps, providing additional wind in our sails.
Strong earnings and two US Federal Reserve interest rate cuts triggered a continued rally in equity markets during the fourth quarter. Small caps rose 2.19% during the quarter, trailing large caps by 22 basis points1 (as measured by the Russell 2000 Index and the Russell 1000 Index, respectively). For the year, small caps rose a respectable 12.81% but lagged large caps for the ninth year in a row—unbelievable!
Microcaps, the smallest of the small, rose 6.25% during the fourth quarter and 22.98% for the year (as measured by the Russell Microcap Index), leading all equity asset classes (yes, even large caps)! Interestingly, despite this strong move, microcaps still trade at a significant discount to all other equity asset classes based on 2026 consensus P/E ratios.
Our two funds, Calamos Timpani Small Cap Growth Fund (CTSIX) and Calamos Timpani SMID Growth Fund (CTIGX), had what we consider to be tremendous quarters. Each fund outperformed its respective benchmark and Morningstar category average during the quarter, extending year-to-date gains.
Calamos Timpani Funds Powered Past Peers and Benchmarks in 2025
Total Returns, 2025
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%.
The funds’ strong performance in 2025 is especially noteworthy given that it was an extremely difficult year for small-cap growth and SMID-cap growth active managers. The table below tells the story. In 2025, only 19% of small-cap growth managers outperformed their benchmarks, with the average manager underperforming by 520 basis points. The eight-month performance since the market low in April marks the worst eight-month active management period in small-cap growth history! SMID-cap growth was even worse, with only a 17% outperformance rate and an average 540 basis points magnitude of underperformance.
Calamos Timpani Funds’ outperformance in 2025 bucked the trend
2025 was a difficult year for small-cap growth and SMID-cap growth active managers
Past performance is no guarantee of future results. Source: Jefferies, January 2, 2026, using FactSet, Lipper Analytical Services, FTSE Russell, Jefferies. The small-cap growth benchmark is the Russell 2000 Growth Index, and the SMID-cap growth benchmark is the Russell 2500 Growth Index.
So, what drove our strong performance in 2025? It was a combination of our investment style, which focuses on fundamental momentum (i.e., sustainably fast and underestimated growth), being embraced by the market, and successful stock picking within that framework, including our exposure to microcaps. Importantly, in both of our funds, our ratio of big winners to big losers was heavily skewed in favor of the winners, which came from a variety of economic sectors.
As our performance has shown, we don’t need asset class strength to put points on the board. However, asset class strength could provide another way for our funds to win. We believe microcaps, small caps, and mid caps may be poised for a performance rebound relative to large caps. Not only are valuations low, but importantly, stimulative fiscal and monetary policy is likely to result in disproportionately strong earnings growth for smaller companies in 2026.
Recent small-cap outperformance (426 basis points over the last six months) may have marked the end of the losing streak. Historically, the first year of a new small-cap winning streak has resulted in an average of 2,700 basis points of small-cap outperformance relative to large caps. I believe the set-up for the asset class is superb—the best I’ve seen in years!
1For the year ending 12/31/2025, the large cap Russell 1000 Index gained 17.37%, and the small cap Russell 2000 Index gained 12.81%. For the three months ending 12/31/2025, the Russell 1000 Index gained 2.41%, and the Russell 2000 Index gained 2.19%.
Total Returns as of 12/31/25
| 4Q 2025 | 1 Year | 3 Year | 5 Year | 10 Year | Fund Inception | |
|---|---|---|---|---|---|---|
| CTSIX | 3.77% | 25.90% | 25.03% | 5.99% | 13.49% | 12.61% (3/23/11) |
| Russell 2000 Growth Index | 1.22% | 13.01% | 15.58% | 3.18% | 9.57% | 9.78% |
| Morningstar Small Growth Category | 1.46% | 8.07% | 13.00% | 2.93% | 10.31% | 9.91% |
| CTIGX | 4.91% | 21.25.58% | 25.17% | 6.63% | — | 12.31% (7/31/19) |
| Russell 2500 Growth Index | 0.33% | 10.31% | 14.32% | 2.98% | — | 8.76% |
| Morningstar Small Growth Category | 1.46% | 8.07% | 13.00% | 2.93% | — | 8.31% |
Performance data quoted represents past performance, which is no guarantee of future results. Average annual total return measures net investment income and capital gains or losses 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.
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.
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. The Russell Microcap® Index measures the performance of the microcap segment of the US equity market, and consists of the smallest 1,000 securities in the small-cap Russell 2000® Index, plus the next 1,000 smallest eligible securities by market cap.
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 Funds invest 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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