U.S. Small Cap Core Equity



The Small Cap Core strategy seeks to provide superior long-term investment returns compared to the Russell 2000 Index, while taking a low risk approach to small company investing. We believe that portfolios of neglected small cap companies with low valuations, long-term attractive business fundamentals and near-term profitability improvement potential should produce strong absolute and risk-adjusted returns over time.


Strategy overview

The team operates from a belief that strong absolute risk-adjusted returns can be generated over time by investing in neglected companies with:

  • Sound long-term business fundamentals
  • Near-term profitability improvement
  • Low valuations at the time of purchase

Approach

Investment philosophy

  • Begin with universe of approximately 2300 publicly traded companies with market capitalization ranges within that of the Russell 2000 index
  • Emphasize companies in the lower end of the market cap scale, between $200 million and $1 billion, with little analyst coverage and not as efficiently valued
  • In-depth and rigorous long-term fundamental research drives security selection

Portfolio construction

  • Well-diversified portfolios holding 50-80 issues
  • Majority of returns from stock selection
  • Maximum in a single security: 5%
  • Maximum in a single sector: 2x Russell 2000 Index weight
  • Fully invested in equities; no market timing
  • Low portfolio turnover: 30-50%

Additional information

Inception
September 1991
Primary benchmark
Russell 2000 Index
Vehicle
Segregated Fund, Separate Account, US Mutual Fund, Canadian Mutual Fund

Related documents

Portfolio managers

Lance James Managing Director & Senior Portfolio Manager, U.S. Value and Core Equity, RBC Global Asset Management (U.S.) Inc.
Murphy O'Flaherty Senior Portfolio Manager, U.S. Value and Core Equity, RBC Global Asset Management (U.S.) Inc.

Investment team

​RBC U.S. Value and Core Equity team

A focus on best ideas stock selection in U.S. small and mid-cap core and value businesses

Connect with our team to learn more