As of June 2026, the Virtus KAR Small-Cap Core Fund Class I (PKSFX) stands out as a highly unique contender in the small-cap arena. Managed by Kayne Anderson Rudnick (KAR), this actively managed fund rejects the traditional, highly diversified approach to small-cap investing. Instead, it leans into a concentrated, high-conviction philosophy aimed at capturing long-term capital appreciation while mitigating typical small-cap volatility.
Whether PKSFX is the “best” option for your long-term growth portfolio depends heavily on your preference for active management, your tolerance for sector concentration, and whether you can even access it, given its current structural limitations. Virtus KAR Small-Cap Core Fund Class I (PKSFX) -0.56% since May 12, 2026 As of Jun 6, 4:00 AM GMT+8 • Disclaimer Jun 6, 2026 1. Evaluate the Distinct Investment Strategy
Most small-cap funds hold hundreds, or even thousands, of stocks to diversify away the high failure rate of small companies. PKSFX completely flips this script.
High Concentration: The fund holds an extremely focused portfolio of just 20 to 40 securities. Its top 10 holdings routinely command over 50% of the fund’s total assets.
Quality Alpha Focus: Subadvisers Todd Beiley and Jon Christensen seek out “high-quality” small businesses. They define this as companies possessing durable competitive advantages (moats), high returns on capital, robust free cash flow, and low reliance on external debt financing.
Low Turnover: Unlike peers that aggressively trade fast-moving small caps, PKSFX maintains a 13% turnover rate. This indicates a patient, long-term buy-and-hold ownership structure. 2. Compare Performance Profiles
Historically, PKSFX’s quality focus has given it a formidable edge over long horizons, though shorter-term cycles show more variance.
The 10-Year Track Record: Over the past decade, PKSFX has delivered an impressive annualized return of roughly 15.05%, widely outperforming its benchmark, the Russell 2000 Index (which annualized at 9.88% over the same timeframe).
Recent Short-Term Lags: As of mid-2026, its 1-year trailing return sits at a modest 4.32% compared to a massive 25.72% rally in the broader Russell 2000 Index. This variance is due to the managers aggressively pruning positions exposed to AI disruption risks (like selling out of UK real estate portal Rightmove) and keeping entirely clear of speculative, unprofitable biotech or energy plays.
Downside Protection: With a historical 3-year beta of 0.79 against its index, PKSFX captures less of the market’s downward shocks, proving that its core mandate—seeking less risk than the volatile small-cap market—holds true. 3. Review Portfolio Metrics and Sector Risks
A look into the fundamental structure of the fund highlights significant blind spots that investors must accept before allocating capital: Morningstar Virtus KAR Small-Cap Core Fund Class I PKSFX – Morningstar
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