Analyzing Recent Performance of Small Cap Value Stocks

Discussion on the recent outperformance of US small cap value stocks, including comparisons with small growth stocks and the Canadian market, emphasizing the importance of patience for long-term investors.

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During this episode, we welcome back Eduardo Repetto, Chief Investment Officer of Avantis Investors. In his leadership capacity, he directs research design and the implementation of strategies and oversees the investment team and marketing initiatives. Our conversation kicks off with Edoardo’s explanation of how Avantis systemizes active management before we dive into strategies for launching in Europe and beyond. He weighs in on the most significant capacity issues that people face today, offering solutions to tweak your approach. We touch on what makes Avantis strategies preferable for advisors and Eduardo shares his insights on the future of small-cap value strategies for emerging markets. We discuss short-term reversals, towing the line between growth and value and factors that should inform asset allocation before diving deeper into small-cap value in the US and Canada. Tune in today to hear more.

Key Points From This Episode:

(0:05:51) What sets Avantis Investors apart from other investment firms.

(0:09:26) Five strategies for launching in Europe starting with free and equity UCITS.

(0:14:00) Accessing UCITS and adapting strategies in accordance with currencies, geographical regulations and restrictions.

(0:22:49) The most significant capacity issue: an inability to invest cashflows.

(0:27:59) Feedback from the advisor community on why they are choosing Avantis strategies.

(0:32:43) Eduardo’s view on the future potential for the emerging markets small cap value strategy.

(0:35:58) Improvements and adaptations to portfolio implementation at Avantis since 2019.

(0:39:01) The controversial nature of short-term reversals and advice for investors thinking about growth and value.

(0:44:40) What should inform asset-allocation decision-making.

(0:45:46) The potential of expanding into a Canadian base.

(0:50:16) Mark’s thoughts on small-cap value in the US and Canada.

Quotes:

“We have to adapt to the regulatory framework. But the strategies are the same. We manage the strategies in the same way, with the same people, with the same philosophy.” — Eduardo Repetto (0:17:44)

“Just expand the offering. Anywhere we go, we do the same because that's the right thing to do. That's the right thing to help people that trust you on day one.” — Eduardo Repetto (0:21:52)

“So, if you think about our valuation, we are using today's profits as a proxy for future profits. Can you improve that proxy? Can you have something better to say, about not level, but changes in level?” — Eduardo Repetto (0:41:16)

Links From Today’s Episode:

Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder Website — https://rationalreminder.ca/

Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/

Rational Reminder on X — https://x.com/RationalRemind

Rational Reminder on YouTube — https://www.youtube.com/channel/

Rational Reminder Email — info@rationalreminder.caBenjamin Felix — https://www.pwlcapital.com/author/benjamin-felix/

Benjamin on X — https://x.com/benjaminwfelix

Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/

Cameron Passmore — https://www.pwlcapital.com/profile/cameron-passmore/

Cameron on X — https://x.com/CameronPassmore

Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/ Eduardo Repetto on Linkedin — https://www.linkedin.com/in/eduardo-repetto-653231155/

Avantis Investors — https://www.avantisinvestors.com/