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New LMCG fund focuses on opportunities in international small caps


LMCG Investments (LMCG) has launch the LMCG International Small Cap Fund allowing financial advisors and retail investors to access LMCG’s international small cap strategy through a no-load mutual fund. 

The Fund seeks long-term capital appreciation, adding value versus the MSCI EAFE Small Cap Index using a bottom-up quantitative approach to investing.

“International small caps can offer important diversification benefits as part of an equity allocation, but investors often overlook this asset class or have limited access to it,” says Kenneth L Swan, Chief Executive Officer of LMCG. “We believe that experienced active management can add value in this area and that a quantitative approach is the most efficient way to sort through the large universe of international small cap stocks.”

The Fund was converted from a collective trust fund, available only to institutional investors since its inception in August 2010. LMCG believes that the Fund will appeal to financial advisors and their clients, given the limited number of competitor funds and LMCG’s experience in this asset class.

The fund is managed by Gordon A Johnson, PhD, CFA, a veteran portfolio manager with more than 23 years of experience managing global portfolios and developing quantitative investment models. Shannon Ericson, CFA, co-portfolio manager, and Daniel Getler, CFA, analyst, complete the investment team.

The team seeks international small cap stocks with attractive valuations that also have good growth prospects and high quality earnings. LMCG’s proprietary, quantitative process evaluates and ranks the universe of approximately 2,500 international small capitalisation companies daily using several stock selection metrics. These metrics include Market Dynamics, Value and Quality. Higher-scoring stocks are considered for purchase, while any current holdings with low rankings are candidates for sale. The result is a portfolio of between 90 and 125 stocks (roughly equally-weighted) that is diversified across industries, sectors and countries, with exposure to both value and growth styles.

“We believe we can take advantage of the significant market inefficiencies in the international small cap universe,” says Johnson. “By selecting stocks ranked highly on a variety of factors based on fundamental investing principles, we can diversify the sources of alpha in the portfolio as we strive to achieve strong relative returns in a variety of market environments.”

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