Small/Mid Cap Value Strategy
Baird Equity Asset Management’s Small/Mid Cap Value portfolio invests in small- to medium-cap U.S. companies and seeks to provide superior risk-adjusted returns and consistently outperform the benchmark Russell 2500 Value Index over a full market cycle (typically 3–5 years). The portfolio comprises companies we expect to exceed street expectations and that trade at discounts to our proprietary calculations of fair value. To help control risks, the portfolio is generally diversified among companies in a broad range of industries and economic sectors.
Portfolio Construction
- A concentrated portfolio of generally 40–50 stocks
- A market cap range typically from $300 million to $10 billion at purchase
- Top holdings generally limited to 5% at cost, 8% at market
- Sectors capped at 30% excluding financials
- Buy-and-hold approach
For more information, contact Rob Zwiebel or the Intermediary Specialist in your region.
Michelle Stevens, CFA, MBA
Senior Portfolio Manager
Managing Director
Michelle has 24 years of investment industry experience, having managed mutual funds and subadvised funds and institutional separate accounts in the Small, Small/Mid (SMID) and All Cap Value Equity disciplines. She holds an MBA from the University of Cincinnati and received her bachelor's degree in economics from Wittenberg University. She also holds the Chartered Financial Analyst designation.
Jonathan DeMoss, CFA, CPA, CFP®
Senior Research Analyst
Senior Vice President
Jonathan has 21 years of investment industry experience and holds both an MBA from Indiana University and a bachelor's degree in accounting/management from Iowa State University. He is a member of the Cincinnati Society of Financial Analysts and has earned the both the Chartered Financial Analyst and CERTIFIED FINANCIAL PLANNERTM certification. Jonathan is also a Certified Public Accountant.
Richard Roesch, CFA
Senior Research Analyst
Senior Vice President
Rich has 24 years of investment industry experience and holds a bachelor's degree in finance from Butler University. He is a member of the Dayton Society of Financial Analysts and has earned his Certified Financial Analyst designation.
Rob Zwiebel
Consultant Relations and
Portfolio Specialist
Director
Rob has 26 years of investment sales, marketing and client service experience, having been responsible for retail and institutional business development for both wirehouse and regional broker-dealer national accounts. He holds a bachelor's degree in finance from the University of Dayton.
Q1 2018 Small/Mid Value and Small Value Commentary
Volatility returned with a vengeance...virtually evaporating vaults of value investors had ventured against the VIX and vexing voyeurs not envisioning vicissitude.
V stands for Victory for active small and mid cap equity managers. During periods of high volatility, small cap value managers have produced alpha of 1.4 versus periods of low volatility when they have produced alpha of -0.71. The low volatility environment of the past few years has been accompanied by strong asset flows to passive strategies. Indeed, a rising tide lifts all boats and since index strategies buy everything in the index indiscriminately, strong ETF flows create an environment that makes it more difficult for active managers to beat their benchmark. However, passive strategies can't have their cake and eat it too. When money flows out of ETFs, active managers win. So too, high quality stocks as measured by return on equity perform better by a monthly spread of 230 basis points1 when money flows out of ETFs, not in. Good portfolio managers don't need volatility to produce superior returns over time, but a little tailwind never hurts.
Annualized Returns (%)
| 3 Months | YTD | 1-Year | 3-Year | 5-Year | 10-Year | Since Inception | Inception Date | |
|---|---|---|---|---|---|---|---|---|
| Baird Small/Mid Cap Value (gross) | -1.86 | -1.86 | 17.23 | 8.37 | 12.09 | 8.78 | 11.99 | 1/1/00 |
| Baird Small/Mid Cap Value (net) | -2.20 | -2.20 | 15.89 | 7.47 | 11.20 | 7.85 | 11.00 | 1/1/00 |
| Russell 2500 Value Index | -2.65 | -2.65 | 5.72 | 7.26 | 9.88 | 9.35 | 10.04 |
Annual Total Returns (%)
| 2017 | 2016 | 2015 | 2014 | 2013 | 2012 | 2011 | 2010 | 2009 | 2008 | 2007 | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Baird Small/Mid Cap Value (gross) | 22.89 | 9.90 | 0.17 | 9.47 | 36.88 | 17.30 | 6.15 | 10.29 | 29.40 | -38.74 | 24.22 |
| Russell 2500 Value Index | 10.36 | 25.20 | -5.49 | 7.11 | 33.32 | 19.21 | -3.36 | 24.82 | 27.68 | -31.99 | -7.27 |
*Data as of 3/31/18