Small/Mid Cap Value Strategy

OVERVIEW

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
TEAM

For more information, contact Rob Zwiebel or the Intermediary Specialist in your region.

COMMENTARY

Q2 2020 Small/Mid Value and Small Value Commentary

Much has changed since the major market averages recorded fresh highs in February of this year…much that is, except the level of those averages. The epic plunge and ricochet of the market puts the S&P 500 within 8% of its all-time high and the Nasdaq Composite 2% above where the sell-off began. During that time, however, the economy has entered the steepest recession since the Great Depression. Corporate earnings estimates have been revised lower by 26% for 2020 and 14% for 2021. As a result, valuations as measured by price-to-earnings ratio have risen to levels not seen even during the Financial Crisis of 2008. At current levels, the market appears priced for perfection, despite the country’s progress controlling the COVID-19 outbreak deteriorating at an exponential pace.


Read Full Small or Small/Mid Value Commentary

PERFORMANCE

Annualized Returns (%)*

 3 MonthsYTD1-Year3-Year5-Year10-YearSince InceptionInception Date
Baird Small/Mid Cap Value (gross) 13.5 -18.1 -14.2 -1.2 1.1 9.8 9.7 1/1/00
Baird Small/Mid Cap Value (net) 13.3 -18.4 -14.9 -2.0 0.2 8.9 8.8 1/1/00
Russell 2500 Value Index 20.6 -21.2 -15.5 -2.6 1.9 8.8 8.2

*Returns less than one year are not annualized.



Annual Total Returns (%)

20192018201720162015201420132012201120102009
Baird Small/Mid Cap Value (gross) 19.34 -14.51 22.55 9.80 0.17 9.47 36.87 17.32 6.09 10.29 29.40
Baird Small/Mid Cap Value (net) 18.40 -15.22 21.54 8.91 -0.50 8.65 35.93 16.36 5.09 9.26 28.20
Russell 2500 Value Index 23.56 -12.36 10.36 25.20 -5.49 7.11 33.32 19.21 -3.36 24.85 27.68

Data as of 6/30/20


Past performance does not guarantee future results.