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Solid All- and Small-Cap Offerings From a Boutique Firm

Solid All- and Small-Cap Offerings From a Boutique Firm

Christopher Franz: Silver-rated LKCM Equity and Bronze-rated LKCM Small Cap Equity share several similarities. Offerings of Fort Worth, Texas, boutique Luther King Capital Management, the funds concentrate their holdings in high-quality companies with sustainable competitive advantages, boasting lengthy track records, and experienced lead managers.

Firm founder and president Luther King has been the lead manager of LKCM Equity since its 1996 inception. He's supported by three additional managers including Steve Purvis, who has led LKCM Small Cap since 1999. Both managers personally invest in their funds. King and Purvis are supported by a large analyst team organized by sector and market cap.

Although the teams and processes are similar, the funds are differentiated by market cap. LKCM Equity falls in the Large Growth Morningstar Category, but as it features an all-cap approach, it has a much lower weighted average market cap than its S&P 500 benchmark. The fund is a suitable core holding in an investor's portfolio. LKCM Small Cap benchmarks to the Russell 2000 Index, and its focus on small-cap stocks makes it a supporting player.

While the funds' recent performance has been challenged, their strong long-term records and low fee structures make them attractive options.

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About the Author

Christopher Franz

Associate Director
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Christopher Franz is an associate director of equity strategies for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc.

Prior to rejoining Morningstar Research Services LLC in 2021, he spent two years with Morningstar Australasia in Sydney, where he served as a senior analyst and environmental, social, and governance strategist, conducting qualitative research on Australian and New Zealand fund managers and leading the team's ESG-related research. Franz initially joined Morningstar in Chicago in 2016, where he focused on U.S. small- and mid-cap strategies. Before joining Morningstar, Franz spent four years as a research analyst for Westwood Holdings Group, where he focused on external manager research and due diligence.

Franz holds a bachelor's degree in financial analysis from Creighton University. He also holds the Chartered Financial Analyst® designation.

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