The Wasatch Micro Cap Fund is Morningstar's top-performing five-star-rated fund, with 25% annualized return. The fund's portfolio manager, Daniel Chace, shared his investment philosophy -- and his favorite stock picks -- with "Squawk on the Street" viewers.
Chace told CNBC's Mark Haines that his fund seeks "high-quality companies with great managements" and "low turnover." He said the last three years have been "strong" for micro-caps and small caps, but Wasatch has begun to "look more internationally" of late -- particularly in Singapore, where the fund has been "very successful" in finding well-managed small caps.