Fundametrics® Small Cap Equity
2Q 2024 Performance Summary and Observations
- The Fundametrics® Small Cap Value strategy trailed its benchmark, the Russell 2000 Value Index, by 20 bps for the quarter.
- Interest rate expectations held steady in June, anticipating nearly two rate cuts. Meanwhile, inflation figures have been lower than consensus estimates, reducing the likelihood of interest rate increases. This could free the FED to start cutting in the second half of the year, which should be a positive for small-cap stocks.
- The Fundametrics investment process emphasizes picking the best stocks within each of the CornerCap defined peer groups. The model’s effectiveness is shown in the returns of the Alpha Composite throughout the quarter where the Alpha Composite buys beat the sell-rated stocks by over 300 bps.
- During the second quarter, lower-risk factors provided the primary benefit to investors while other factors saw limited gains. Lower-risk factors that stood out included low beta, low short interest, low leverage and earnings stability.
- The market environment for long-term investors still appears favorable for Small Cap Value stocks, which offer attractive absolute and relative valuations vs. large caps.
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