Small Cap Value – Exploiting the Valuation Disconnect

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All investments contain risk and may lose value. This podcast is for general information only and should not be relied on for investment advice or recommendation of any particular security, strategy, or investment product.

The portfolio manager’s views and opinions expressed in this podcast are as of April 29, 2022. Such views are subject to change and may differ from others in the firm, or the firm as a whole. The portfolio manager’s comments may include estimated and/or forecasted views, which are believed to be based on reasonable assumptions within the bounds of current and historical information. However, there is no guarantee that any estimates, forecasts or views will be realized. The securities discussed herein are not meant to be indicative or reflective of the strategy’s entire portfolio. Rather, such examples are meant to exemplify H&W’s analysis and execution of the strategy. While the securities highlighted were positive contributors to the strategy during the one year ended 3/31/22, not all investments held in the strategy were profitable. In addition, no assumption should be made that the securities highlighted continue to be profitable. Past performance of these securities, or any other investments, is not an indicator of future results. H&W reserves the right to change its investment perspective and outlook and has no obligation to provide revised assessments and opinions.

Investment returns include reinvestment of dividends, interest and capital gains. Valuation is based on trade-date information and stated in U.S. dollars. Net performance results are presented after actual management fees and all trading expenses but before custodial fees. The Small Cap Value strategy’s returns for different time periods and market cycles can result in significantly different performance results. An account’s investment guidelines, timing of transactions, market conditions at the time of investment and other factors may lead to different performance results. The Composite includes all Small Cap Value discretionary accounts. The Small Cap Value strategy seeks capital appreciation primarily through investments in equity securities of small cap companies and may invest in foreign (non-U.S.) securities. Additional performance disclosures are included in the strategy’s GIPS Report.

Holdings and attribution analysis are based on a representative portfolio of the Small Cap Value (SCV) Strategy. The portfolio is selected based on factors determined by Advisor to be “representative” of the strategy, considering such factors as (but not limited to) investment guidelines/restrictions, time period under Advisor’s discretion, and/or cash flow activities. Each portfolio’s holdings/performance in the strategy vary due to different restrictions, cash flows and other relevant considerations. Contributors to Relative Performance identifies those securities that are largest contributors (or detractors) on a relative basis to the index. Securities’ absolute performance may reflect different results. To calculate the portfolio’s net of fee return, the strategy’s highest annual advisory fee (excluding performance-based fees if applicable) is divided by 12 to get a monthly fee and then multiplied by the number of months in the covered period. The advisory fee for the covered period is then subtracted from each return. The Russell 2000 Value Index measures the performance of those Russell 2000 companies with lower price-to-book ratios and lower forecasted growth values.

Securities identified do not represent all securities purchased, sold, or recommended for advisory clients, and may not be indicative of current or future holdings or trading activity. No assurance is made that any securities identified, or all investment decisions by H&W were or will be profitable. Any discussion or view of a particular company is as of the publication date but may be sold and no longer held in the SCV strategy at any time, for any reason, without notice, subsequent to the publication date. Portfolio holdings are subject to change; a complete list of holdings is available upon request at [email protected], subject to the firm’s portfolio holdings disclosure policy.

Investing in smaller, medium-sized and/or newer companies involves greater risks not associated with investing in large company stocks, such as business risk, significant stock price fluctuations and illiquidity. Investing in foreign as well as emerging markets involves additional risk such as greater volatility, political, economic, and currency risks and differences in accounting methods. Investing in equity securities have greater risks and price volatility than U.S. Treasuries and bonds, where the price of these securities may decline due to various company, industry, and market factors.

A value-oriented investment approach involves the risk that value stocks may remain undervalued or may not appreciate in value as anticipated. Value stocks can perform differently from the market as a whole or from other types of stocks and may be out of favor with investors and underperform growth stocks for varying periods of time.

Russell Investment Group is the source and owner of the Russell Index data contained herein (and all trademarks related thereto), which may not be redistributed. The information herein is not approved by Russell. H&W and Russell sectors are based on the Global Industry Classification Standard by MSCI and Standard and Poor’s.

Market Disruption: The global coronavirus pandemic has caused disruption in the global economy and extreme fluctuations in global capital and financial markets. H&W is unable to predict the impact caused by coronavirus pandemic, which has the potential to negatively impact the firm’s investment strategies and investment opportunities.

Past performance is not indicative of future performance.