Refining Small Caps

Similar to a bar of steel, a small cap equity portfolio should be a balance of strength and malleability. While less tangible than minerals, it can be said that an impurity is slowly weakening the Russell 2000 Index —an increasing presence of unprofitable companies. At 39% of the Russell 2000 Index as of June 30, 2024, investments in these unprofitable companies can have detrimental effects on the long-term returns of those investors who passively buy exposure. By reviewing the current state of the index, we believe investors should take a look at how an active focus on quality and valuation can positively impact future performance.

To read the full thought piece, please use the link below.