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A Solid Small-Value Fund Reopens

A Solid Small-Value Fund Reopens
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Columbia Small Cap Value II A

Linda Abu Mushrefova: Columbia Small Cap Value II recently reopened to new investors after being closed since May 2008. The fund's seasoned bench and proven bottom-up approach to small-cap investing earns it a Morningstar Analyst Rating of Bronze.

Lead manager Chris Stadlinger has been at the helm since the strategy’s inception in May 2002, while comanager Jarl Ginsberg came aboard in February 2003. However, they have worked together for longer. Previously, the duo managed small- and mid-cap value portfolios for BlackRock from 1998 to 2002. The team has further support from a dedicated research analyst and Columbia Threadneedle’s centralized group of 24 sector analysts. Together, the team has successfully applied its disciplined valuation-focused approach.

It looks for small-cap stocks that boast attractive relative valuations but that have also demonstrated an uptick in share price and fundamental improvement. In this way, they hope to avoid value traps--something that they have done successfully over time. The team defines cheap stocks as those with price/earnings ratios in the cheapest 40% and price/book, price/sales, and price/cash flow ratios in the cheapest 20% of their universe, which primarily consists of names in the Russell 2000 Value Index. The team uses quantitative screens to whittle down their universe and direct their research, but bottom-up security selection drives the strategy. Comanagers Stadlinger and Ginsberg collaborate on portfolio construction and build a broadly diversified portfolio of 90-130 stocks.

The approach has been consistently applied and has rewarded investors that have stuck with it, making this a great option for investors seeking small-cap, relative 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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