Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Small-stock strategy powers best-performing U.S. equity funds

EconomyDec 23, 2021 01:10AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: A U.S. one dollar banknote is seen in this illustration taken November 23, 2021. REUTERS/Murad Sezer/Illustration/File Photo

By David Randall

NEW YORK (Reuters) - The top-performing actively managed U.S. equity funds of 2021 were predominantly focused on small-caps as a strategy, according to data from Morningstar.

The year's top-performing actively managed U.S. equity fund was the Bridgeway Small-Cap Value fund which posted a 61.5% return, according to Morningstar data through Dec. 15, while eight out of the top 10 funds also had small-caps as a strategy.

Some small-cap funds outperformed due to a bet on cyclical stocks that surged as the U.S. economy continued to recover from the coronavirus pandemic.

"In our opinion cyclical stocks and consumers right now are among the cheapest stocks we see in the market," said Ken Farsalas from Oberweis Micro-Cap fund, which returned 41.3% for the year, according to Morningstar data, and was ranked no. 6. Farsalas said, "There are consumer companies that are trading as if the economy is going into recession."

The strong performance came as concerns about sustained high inflation and supply chain bottlenecks weighed on the shares of smaller companies overall. The Russell 2000 benchmark of small companies posted a 12.5% gain for the year to date, half the 25% gain of the large-cap S&P 500 index as of Dec. 21.

Farsalas pinned the underperformance in small-cap stocks as a result of the Federal Reserve pulling back its emergency-level support for the economy, weighing on the sort of speculative, high-growth stocks that rallied during the early stages of the pandemic in 2020.

Among his fund's winners was retailer Boot Barn (NYSE:BOOT) Holdings Inc, which is up nearly 152% since the start of January.

Bridgeway was not immediately available for comment on its strategy.

Overall, the top-performing equity fund for the year according to Morningstar data was the MicroSectors US Big Oil 3X Leveraged ETN, which gained 151.1%, followed by a Direxion fund that made a three-times leveraged bet on homebuilders and suppliers and returned 139.4% for the year.

Among fixed income funds, the AlphaCentric Income Opportunities fund led the field with a 14.5% return through its focus on non-agency residential mortgage-backed securities. It was followed by the 11.5% gain in the RiverPark Strategic Income Institutional fund, which focuses its portfolio on high-yield corporate bonds.

Small-stock strategy powers best-performing U.S. equity funds
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email