2
Vanguard Explorer
VEXPX
($
388
million), and
Royce Value Plus
RYVPX
($
288
million.) I’m not
worried about Vanguard Explorer because those
redemptions are dispersed across many subadvisors
and a $
10
billion asset base. But it could be a real
problem for the others.
Resource Stocks Pack a Punch
Has your mild-mannered small-cap fund turned into a
Tasmanian devil? Materials stocks such as miners
may be to blame. With declining demand from China,
these stocks have pummeled the value managers
who bet on a rebound. Even a modest amount can
smack a fund.
The aforementioned Royce Low Priced Stock has the
biggest materials stake with
17%
of assets in the
sector. Not coincidentally, it is also the only small-cap
fund in the Morningstar
500
that’s in the red for
2013
, and it has the most outflows.
Schneider Small
Cap Value
SCMVX
,
Allianz NFJ Small-Cap Val-
ue
PNVDX
,
Royce Special Equity
RYSEX
,
Royce
Micro-Cap
RYOTX
,
Third Avenue Small Cap
Value
TASCX
, and
Royce Opportunity
RYPNX
all
have more than
10%
of assets in the sector.
Royce Special Equity has remained tame, but Royce
Opportunity and Schneider Small Cap Value have had
high volatility with a standard deviation over
20%
.
Managers Believe in Their Funds
Whatever the future holds, you can be assured your
small-cap managers will have their money alongside
yours. All of the actively managed small-cap funds
in the Morningstar
500
can boast that their managers
invest in them. In fact,
30
of the
61
have a man-
ager with at least $
1
million of his or her own money
in them.
Not Much Love for Cash
Some have argued we should all be building a cash
stake so we’ll be ready for the next buying opportu-
nity, but small-cap managers remain fully invested for
the most part. Only two have raised cash beyond
where they historically have it.
Royce Micro-Cap
RYOTX
and
Wasatch Core
Growth
WGROX
have
12%
and
10%
, respectively, in
cash. That may serve them well if stocks swoon.
Other funds have the pedal to the metal: Royce Low
Priced Stock,
Turner Small Cap Growth
TSCEX
,
Wasatch Ultra Growth
WAMCX
, and
Litman Greg-
ory Masters Smaller Companies
MSSFX
have
cash stakes that are less than
1%
.
Upgrades and Downgrades
We raised our rating on
Artisan Small Cap Investor
ARTSX
to Silver from Bronze as we grew more
comfortable with how Craigh Cepukenas was working
with Andy Stephens’ team. The team came on to
work with Cepukenas in
2009
. Stephens’ group has
Name
Ticker
Morningstar
Analyst Rating
Small Blend
Ariel Discovery Investor
ARDFX
´
ASTON/River Road Select Value N
ARSMX
´
ASTON/River Road Small Cap Value N
ARSVX
´
Berwyn
BERWX
•
Bogle Small Cap Growth Inv
BOGLX
•
Bridgeway Ultra-Small Company Market
BRSIX
´
DFA US Micro Cap I
DFSCX
Œ
DFA US Small Cap I
DFSTX
Œ
Fidelity Small Cap Stock
FSLCX
´
FMI Focus
FMIOX
´
Royce Micro-Cap Invmt
RYOTX
´
Royce Total Return Invmt
RYTRX
´
Stratton Small-Cap Value
STSCX
´
T. Rowe Price Small-Cap Value
PRSVX
´
Vanguard Small Cap Index Adm
VSMAX
Œ
Vanguard Tax-Managed Small Cap Adm
VTMSX
Œ
Small Growth
Artisan Small Cap Investor
ARTSX
•
Baron Small Cap Retail
BSCFX
´
Brown Capital Mgmt Small Co Inv
BCSIX
Œ
Century Small Cap Select Inv
CSMVX
•
Conestoga Small Cap
CCASX
•
Kalmar Growth-with-Value Sm Cp Inv
KGSCX
´
LKCM Small Cap Equity Instl
LKSCX
•
Royce Low Priced Stock Svc
RYLPX
•
Royce Pennsylvania Mutual Invmt
PENNX
•
T. Rowe Price Diversified Sm Cap Growth
PRDSX
´
T. Rowe Price New Horizons
PRNHX
´
T. Rowe Price Small-Cap Stock
OTCFX
•
Vanguard Small Cap Growth Index Admiral
VSGAX
•
Wasatch Core Growth
WGROX
•
Small Value
Diamond Hill Small Cap A
DHSCX
Œ
Royce Opportunity Invmt
RYPNX
´
Third Avenue Small Cap Value Instl
TASCX
´
Vanguard Small Cap Value Index Admiral
VSIAX
•
Top-Rated Open Small-Cap Funds
The State of Small-Cap Funds
Continued From Cover
