From the article below, the last quote was the right one. And:
- What constitutes “smallcap” is..small in the global institutional investment space. It is very difficult to simply wake up and say, “regime change – smallcap baby” in a size that makes a difference.
- The “crap status” of what constitutes smallcap indicies makes it a big question mark to invest in passive indicies. The Russell 2000 is 40% unprofitable and has a crapload of crappy banks.
- Holding all other factors frozen, Smallcap historically has high R2 to credit – not to changes in the absolute level of interest rates.
- The history of the world is the underestimation of career risk at the forefront of asset allocation changes. Despite very strong data supporting future return outperformance from any legitimate asset class that experiences multi-year outflows, a change in institutional apathy toward an asset class is…stubbornly paced.
If you are asking, CSC remains more than capable of running an institutional grade, 30 stock smallcap portfolio for the largest global, institutional client world. But we have structurally “pivoted” through the addition of an LP structure that is more highly focused with an active element. We see the benefit of helping ourselves vs waiting for the kindness and sector asset inflow from strangers. But that would be nice too.
Ping us if interested – happy to send you details.
If a Soft Landing Is in the Cards, Why Aren’t Small-Cap Stocks Rallying?
The Russell 2000 has trailed the S&P 500 since the Fed cut interest rates
Small-cap stocks are expected to be among the great beneficiaries of any interest-rate cut. That isn’t happening this time.
The small-cap-focused Russell 2000 index has slipped 0.5% since the bold interest-rate cut by the Federal Reserve two weeks ago, trailing the 1.3% advance of the large-cap S&P 500. That interrupted a rally among shares of small, domestically focused companies that kicked off in July, when a surprisingly cool inflation report bolstered investors’ confidence that the central bank had achieved its goals.
Read the full article at wsj.com.
