Finding growth opportunities in US smaller companies
WHY A US SMALL CAP EQUITY STRATEGY?
The US is an economic powerhouse, home to some of the biggest and most profitable companies in the world. But in a highly efficient stock market it can be difficult to deliver alpha through investing in large cap giants.
In contrast, we believe the US small cap market is under-researched, creating opportunities for managers who know where to look for value and sustainable growth.
Many of the thousands of small cap stocks listed on the US market have no Wall Street coverage. This can create market inefficiencies that can be leveraged to take advantage of mis-pricing in the market.
Within a wider portfolio, our US Small Cap Equity strategy offers exposure to an innovative sector – which we believe has the potential to give investors the opportunity to buy into tomorrow’s winners today.
At BNP Paribas Asset Management we believe sustainable companies with enduring competitive advantages, trading at attractive valuations will produce superior returns over a long term investment horizon.
We believe bottom-up stock selection, as opposed to top-down sector allocation, has the potential to add greater value for investors.
Experience and collaboration lead to better investment decisions. They are at the heart of our investment philosophy.
Our process for investing in US small cap equities has four key stages.
1. Idea generation and screening
2. Fundamental research and valuation
3. Stock selection and discussion
4. Portfolio construction and risk management
At each stage our experience and industry contacts help to identify potential investments. We look for the very best opportunities within this sector: companies that offer potential for sustainable earnings growth and have positive characteristics – particularly in relation to ESG factors.
This process aims to ensure a consistent approach, where ideas are thoroughly tested and risk management is robust.
The US equities team is based in Boston, giving us on-the-ground access and insight to the sector. It comprises portfolio managers, research analysts and investment specialists.
Pamela Woo, who has over 25 years’ investment management experience, leads the team. She is supported by portfolio managers Geoff Dailey and Chris Fay, both of whom have established track records in this sector.
Interview with Pamela Woo
US Small Caps summary video
|Daniel Morris discusses the outlook for US small caps with Pamela Woo.||Investing in small caps can add exposure to some very interesting companies.|
Investments are subject to market fluctuations and the risks inherent in investments in securities. The value of investments and the income they generate may go down as well as up and it is possible that investors will not recover their initial outlay, the strategies described being in risk of capital loss. There is no guarantee that the performance objective will be achieved. Past performance or achievement is not indicative of current or future performance. Reliance upon information in this material is at the sole discretion of the reader. Investment involves risks.