Jay Kaplan on Asset TV's Small-Cap Masterclass
article 07-19-2017

Jay Kaplan on Asset TV's Small-Cap Masterclass

Portfolio Manager Jay Kaplan joins Asset TV's Small-Cap Masterclass to discuss what's happening in the asset class and where he is finding value and opportunity.


Courtesy of Asset.tv. All Rights Reserved.

Portfolio Manager Jay Kaplan joined Asset TV's Small-Cap Masterclass on June 28 to discuss what is driving small-cap performance and what may be next for the asset class. 

Commenting on the current rising interest rate environment, Jay said, "After the election there was a very big rally in small-caps, which took a little bit of a pause, and early in the winter it picked back up again. I think the market got very excited about the potential for what might happen in a new administration. I say potential because we haven’t seen any of this stuff happen yet. The market’s excited about the potential for tax cuts, infrastructure projects, repatriation of cash, and a faster growth rate in an administration that might be less regulatory.  So all of that had led to the small-cap market really zooming up pretty quickly, I think."

Jay also discusses the prospects of a correction this year: "In 19 of the last 20 years there has within the year been about a 10% correction in the Russell 2000, with 2013 being the exception. We’re about halfway through 2017 and have not had one yet.  So it would not be unreasonable to assume that there’s a decent possibility that we could get a 10% down between now and the end of the year."  

He also commented on the active versus passive management debate, saying, "Since the great recession, virtually every down period has been followed by a quick snapback up. And that, I think, has added some fuel to passive. I think if we have a time where… the market goes down, if we don’t have that snapback right away, active managers with their risk control and portfolio construction can shine and put up reasonable returns. I think that will maybe return some credibility to the discussion about active versus passive on the active side."

Watch Asset TV's Small-Cap Masterclass here. 

Important Disclosure Information

The thoughts and opinions expressed in the video are solely those of the persons speaking as of June 28, 2017 and may differ from those of other Royce investment professionals, or the firm as a whole. There can be no assurance with regard to future market movements. 

Investments in securities of small-cap companies may involve considerably more risk than investments in securities of larger-cap companies. (Please see "Primary Risks for Fund Investors" in the prospectus.)

The Russell Investment Group is the source and owner of the trademarks, service marks, and copyrights related to the Russell Indexes. Russell® is a trademark of Russell Investment Group. The Russell 2000 Index is an unmanaged, capitalization-weighted index of domestic small-cap stocks. It measures the performance of the 2,000 smallest publicly traded U.S. companies in the Russell 3000 Index. The performance of an index does not represent exactly any particular investment, as you cannot invest directly in an index.

This material is not authorized for distribution unless preceded or accompanied by a current prospectus. Please read the prospectus carefully before investing or sending money. Smaller-cap stocks may involve considerably more risk than larger-cap stocks. (Please see "Primary Risks for Fund Investors" in the prospectus.)



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