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Investment Strategy
Research Process
Portfolio Construction
Sell Discipline
Portfolio Management
Core Brochure
At least 80% of the value of the Fund’s total assets is invested in a diversified portfolio of common stocks issued by companies with a small cap market capitalization at the time of initial purchase. A blended approach is used when managing the Fund’s profile, comprising both growth and value stocks.
Through bottom-up, fundamental research and quantitative tools, we identify well-positioned companies that are undervalued.
- Our team process and culture of collaboration between sector specialists and portfolio managers leads to effective decision making and accountability.
- Our sector specialists research companies across the capitalization spectrum, enhancing our ability to identify evolving trends and investment ideas.
- We prefer companies with disciplined management, superior business models and/or competitive advantages.
- Quantitative tools contribute to idea generation, portfolio construction and risk management.
- We are style agnostic, but believe that valuation is critical to capturing returns.
We focus on bottom-up stock selection, and limit sector differences versus the benchmark Russell 2000 Index to +/- 5% of total portfolio value. In addition, we utilize Northfield risk analysis to ensure that a substantial majority of predicted tracking error versus benchmark is due to residual risk (stock-specific traits) versus common factor risk.
Subject to the 5% deviation limit noted above, sector over/underweights versus benchmark result from having a greater or lesser number of attractive investment ideas in a given sector at a point in time, rather than a deliberate top-down strategic view of the sector.
Sell decisions are driven primarily by fundamental criteria, with valuation a close second in terms of importance. We will exit a stock if:
Fundamentals
Deteriorating long-term outlook.
Weakened competitive position.
Management execution and credibility valuation.
Stock achieves price target.
New idea with better risk/reward potential.
Valuation
Stock achieves price target.
New idea with better risk/reward potential.
Risk Management
Position is no longer at an appropriate size; trim to keep position at appropriate size, independent of valuation.
Matthew P. Ziehl, CFA (RS) has managed RS Small Cap Core Equity Portfolio since 2002.* Mr. Ziehl joined RS Investments in October 2006 in connection with GIS's acquisition of an interest in RS Investments. From December 2001 to October 2006, Mr. Ziehl served as a managing director at Guardian Life. Prior to joining Guardian Life, Mr. Ziehl was a team leader with Salomon Brothers Asset Management, Inc. for small growth portfolios since January 2001, and a co-portfolio manager of Salomon Brothers Small Cap Growth Fund since August 1999. He holds a B.A. in political science from Yale University and an M.B.A. from New York University.
Core Equity Brochure
* Includes service as a portfolio manager or co-portfolio manager, as applicable, of the Portfolio's Predecessor Portfolio for periods prior to October 9, 2006, the commencement of operations of the Portfolio.
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