Linda Abu Mushrefova: For investors seeking small-cap exposure, Bronze-rated Westwood SmallCap is a solid choice. Despite landing in the small-blend Morningstar Category, the team adopts a valuation-focused approach, making the fund an appropriate choice for investors seeking either value or blend exposure.
A strong team supports this strategy through their proven team-based approach. At Westwood, all portfolio managers also act as analysts. Additionally, a centralized team of approximately 20 research analysts, divided by industry, are responsible for conducting bottom-up fundamental research. Together, the team has rewarded investors through strong stock selection as evidenced by their attractive long-term performance record where it tops both the Russell 2000 Value and Russell 2000 indexes from its April 2007 inception through October 2018.
The approach adopted here is research-focused and is divided into three steps. First, portfolio managers and analysts model names in their industries over a three- to five-year time horizon looking for those with attractive earnings growth potential trading at a discount to their estimated intrinsic value. Next, a peer group review process ensures that only the best ideas make it into the portfolio. Finally, the portfolio managers construct a diversified portfolio. This disciplined approach has rewarded investors over time through strong downside protection without sacrificing too much of the upside.
An added bonus is its attractive price tag. The fund is open to new investors and is a great option for investors seeking small-cap blend or value exposure.