Page 24 - ARUBA TODAY

Monday 27 March 2017 BUSINESS
A24

Fund manager Q&A: Spotlight on investing in small-cap funds

ALEX VEIGA manager of Aberdeen with a longer term in-
AP Business Writer Asset Management’s vestment horizon should
Stocks in smaller compa- Aberdeen U.S. Small certainly start looking
nies trounced the broad- Cap Fund (GSXAX), now — especially from
er market last year, espe- makes the case for why where we came from,
cially in the weeks after small-company stocks postelection at the end
the presidential election. remain fairly valued. But of the year — at valu-
So far this year, though, he also favors a wait- ations of small versus
it’s been a different story. and-see approach until large.
The Russell 2000 index of there’s more clarity out We feel more confident
small-company stocks is of Washington. or comforted with where
at about breakeven for The fund is down about 4 small caps are trading
this year after vaulting percent this year, but up on a relative basis to the
19.5 percent in 2016. By 15.8 percent from a year S&P 500 today, given
comparison, the Stan- ago, according to Morn- the underlying prospects
dard & Poor’s 500 index ingstar. that we see.
is up 5 percent. Other Answers have been edit- If you take the Russell
major stock indexes ed for length and clarity: 2000 and look at those
have also notched gains This undated photo provided by Aberdeen Asset Management companies that are
this year. Q: Why are smaller com- shows Ralph Bassett, portfolio manager for the Aberdeen U.S. forecast to have positive
Investors bid up small- pany stocks lagging the Small Cap Fund. In an interview with The Associated Press, Bas- earnings, the consen-
company stocks on the rest of the market this sett makes the case for why small company stocks are poised sus expectation is still for
belief that the compa- year? for a turnaround, after a weak start to 2017. double-digit returns this
nies would benefit more A: Part of the reason (Courtesy of Aberdeen Asset Management via AP) year in terms of earnings
from an improving U.S. we’ve seen maybe a bit growth.
economy and promises of underperformance optimism around some largest overweight to the So, even absent multiple
of tax cuts, deregula- more recently has been of the pro-growth pro- index was in industrials. expansion or anything
tion and other policies the fact that the mar- posals being enacted Our largest holding was that would cause mar-
championed by the in- ket ran up quite strongly this year. Beacon Roofing Supply. kets to revert higher, we
coming Donald Trump last year, particularly in To see further propulsion Q: Is now a good time to still think that underlying
administration. Lately, the third quarter and in the market we’re go- buy small-cap stocks? earnings growth remains
though, doubts over then ultimately postelec- ing to need to see some A: We think it’s a good reasonably healthy.
when key aspects of tion. We think that on a of those (policy) issues time to start looking. We And what we see in
Trump’s agenda will be relative basis we’ve just come into play. are never great timers terms of the propos-
enacted have begun to seen some underperfor- of asset classes, and I’m als being put out there
weigh on small-compa- mance after that out- Q: What is your fund’s saying that as a manag- should only help to sup-
ny stocks. performance. biggest holding? er. It’s very hard with any port that in coming
Ralph Bassett, portfolio Also, there might be less A: As of December, our precision, but anyone years.q

Yellen: problems of childhood poverty linger

MARTIN CRUTSINGER challenges, Yellen said. Yellen said there was a
AP Economics Writer That was double the num- clear connection between
WASHINGTON (AP) — A ber with financial troubles childhood struggles and
new Federal Reserve sur- who did not face such con- financial problems later in
vey has found that chil- cerns as children. life.“Young adults who reg-
dren who grew up in pov- Yellen told a Fed confer- ularly or sometimes worried
erty were twice as likely ence on community devel- when they were children
to struggle with financial opment that the findings about care, safety or hav-
challenges later in life, Fed underscored the need to ing enough to eat are also
Chair Janet Yellen said late provide children with the less likely to be employed,
last week. resources they need to less likely to have consistent
The survey showed that achieve financial success income month-to-month
more than half of young later in life.In her speech, and less likely to pay all of
people age 25 to 39 who Yellen made no comments their current monthly bills in
reported that as children on the current state of the full, compared with those
they worried over things like economy or interest rates. who never or rarely worried
having enough food were In the survey, which the Fed about these concerns as
currently facing financial will publish later this spring, children,” Yellen said. q