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The Microcap Core Equity strategy seeks to provide superior long-term investment returns compared to the Russell Microcap Index, while taking a low risk approach to microcap investing. We believe that portfolios of neglected microcap companies with low valuations, long-term attractive business fundamentals and near-term profitability improvement potential should produce superior absolute and risk-adjusted returns over time.


Strategy overview

Belief that strong absolute risk-adjusted returns can be generated over time by investing in neglected companies with:

  • Strong long-term business fundamentals
  • Near-term profitability improvement
  • Low valuations at the time of purchase

Our approach

Investment process

  • Begin with universe of approximately 3000 publicly traded companies with market capitalizations within the range of the Russell Microcap Index
  • Emphasis on companies in the lower end of the market cap scale, between $50 and $500 million, with little analyst coverage and not as efficiently valued
  • In-depth and rigorous long-term fundamental research drives security selection

Portfolio construction

  • Well diversified portfolios: 60-90 issues
  • Majority of returns from stock selection
  • Maximum in a single security: 5%
  • Maximum in a single security: 2x Russell Microcap Index weight
  • Fully invested in equities; no market timing
  • Low portfolio turnover: 30-50%

Additional information

Inception
May 2003
Primary benchmark
Russell Microcap Index
Vehicle
Segregated Fund, US Mutual Fund

Related documents

Portfolio managers

Investment team

​RBC U.S. Value and Core Equity team

A focus on best ideas stock selection in U.S. small and mid-cap core and value businesses

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