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3 Top Managers Talk Small Caps

Small-cap Medalist fund managers discuss the rise of strategic beta, the move to passive, small-cap moats, and opportunities today.

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The conventional wisdom: Investing in small companies comes with extra risks but also greater rewards for active managers who can add value in a less efficient market. Yet assets are flowing to passive funds across the market-cap spectrum--while the strategic-beta industry is boiling down active management to simple sets of factors that can be packaged and sold at lower cost. Meanwhile, a weak dollar and global growth are benefiting large corporations more than smaller companies, and anticipated post-election policy changes that were expected to boost small caps haven't yet panned out.

For insight, we turned to three leading small-cap portfolio managers who run funds rated Morningstar Medalists by our research analysts: Andy Adams, lead manager of  Mairs & Power Small Cap (MSCFX); Don San Jose, who runs  JPMorgan Small Cap Equity (VSEIX); and JB Taylor of  Wasatch Small Cap Growth (WAAEX) and  Wasatch Core Growth (WGROX). All three have proven able to find long-term opportunities regardless of the market environment.

Dan Culloton does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.