Jordan Irving, Portfolio Manager, Small Cap Equity, Glenmede Investment Management (GIM) joined Julie Cooling, Founder & CEO, RIA Channel to discuss his outlook on small cap markets.
Glenmede Investment Management is a boutique asset management firm, specializing in utilizing quantitative analysis and fundamental insights. Offering equity, fixed income, liquid alternative and ESG strategies, GIM is dedicated to helping investors achieve their goals and aims to deliver dependable, steady results.
“We are trying to blend the art and science of investing,” says Irving on GIM’s investing philosophy. The Glenmede Small Cap Equity strategy, co-managed by Irving, aims to identify undervalued, high quality small cap companies, with good earnings growth potential. Starting with the Russell 2500 universe, the firm leverages a quantitative screen consisting of 19 factors, and ends up with roughly 300 stocks. From there, Irving and team leverage fundamental research to uncover opportunities and narrow down the portfolio to about 85 to 100 securities. The actively managed strategy, aims to deliver long-term outperformance and portfolio diversification against its broader index-based counterparts.
Active management is especially critical in the small / mid cap space, explains Irving on the value of security selection. For example, Irving and team consider additional long-term factors such as the impact of negative earners on a portfolio. Rather than allocate to both a small cap growth and small cap value manager, Irving says that the Glenmede Small Cap Equity strategy can be leveraged as a stand alone small cap core option.
Irving says things are looking very opportunistic for small caps. Since the COVID-19 induced recession, the markets are way up. Economic growth indicators, like an increase in consumer spending, inventory restocking and homebuilding, mimic the start of a new market cycle, which bodes well historically for small caps.
To learn more, register and watch Glenmede’s webcast: The Case For Active Small Cap Investing Now.
Small Caps have enjoyed a historic run from the COVID-19 bottom in 2020, leading many investors to contemplate the likely path going forward. In this presentation, we will examine asset class relationships during prior years and highlight significant shifts in the investment landscape that may signal that small-cap leadership could be durable. Additionally, we will examine the outsized impact that companies with negative earnings have had in small caps and highlight the role of investor behavioral biases in creating price distortions. Finally, we will make an investment case for why this regime change could have legs and highlight opportunities for positioning client portfolios.
Links: Why Profitability Matters: Positive Vs Negative Earnings Glenmede Investment Management Glenmede Small Cap Equity Portfolio