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An Appealing Small-Cap Fund

An Appealing Small-Cap Fund
Securities In This Article
Westwood Quality SmallCap Fund Inst

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.

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About the Author

Linda Abu Mushrefova

Senior Product Manager, ETF's
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Linda Abu Mushrefova, CFA, is a manager research analyst for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. She covers equity strategies.

Before rejoining Morningstar in 2017, Mushrefova was an analyst on the fixed-income team at Neuberger Berman, covering opportunistic strategies. From 2013-16, she held a variety of roles at Morningstar, including as a product consultant and a data analyst for the firm's open-end and hedge fund databases.

Mushrefova holds a bachelor's degree in economics from Northwestern University. She also holds the Chartered Financial Analyst® designation.

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