Corrections are Buying Opportunities not the End of an Asset Class

PR Newswire

FRANKLIN, Tenn., May 28, 2014 /PRNewswire/ -- "I've seen it throughout my 30 plus years in this business; large cap stocks retreat 10% and it's a buying opportunity; small cap stocks retreat 10% and it's the end of the asset class," so says Robert J. Sullivan, Chief Investment Officer at the Satuit Funds. "Throughout market history, these corrections in small cap stocks have proven to be excellent buying opportunities."  The Satuit Funds consist of the Satuit Capital U.S Emerging Companies Fund (SATMX), the Satuit Capital U.S. Small Cap Fund (SATSX) and the Satuit Capital U.S. Smid Cap Fund (SATDX).

The equity markets have corrected 10% plus numerous times over the last 50 years. Corrections are a part of any longterm business and stock market cycle.  Price momentum as well as economic momentum is never linear in direction.  There are pauses and these pauses represent excellent entry points for investors who have been under allocated to asset classes. "Investors are underweight in U.S. domestic equity securities," notes Mr. Sullivan. "the exposure to U.S. domestic equity strategies, especially U.S. small cap equity strategies, is the lowest it's ever been."  Indeed, data supports Mr. Sullivan's assertion. U.S. investor participation in the stock market is at its lowest level in years if not in history.  Investors continue to be reluctant to invest into the U.S. equity market even though the equity indexes have been hitting all time highs.

Long term performance of a diversified investment portfolio is dependent upon the equity allocation of the portfolio. "Investors typically begin their equity allocation with an overweight to U.S large cap strategies and then sprinkle in small cap strategies," observes Mr. Sullivan.  "Yet if you evaluate the long term driver of outperformance in the portfolio, it comes from the allocation to smaller capitalization strategies."  While smaller capitalization strategies tend to be more volatile then large cap strategies, investors are rewarded for the additional risk by receiving additional return.

With the weakness in the U.S. equity market of late, especially in small cap stocks, should investors be rethinking their U.S. domestic equity allocations? "Absolutely," says Mr. Sullivan.  "Time and time again we have seen this pattern repeat itself; small cap stocks correct, investors think the asset class is dead and the next move in the asset class is higher."

Should you have any questions please do not hesitate to contact us at 1-973-568-6799 or for a Prospectus visit our web site
You should carefully consider the investment objectives, potential risks, management fees, and charges and expenses of the Funds before investing. The Funds' prospectus contains this and other information about the Funds, and should be read carefully before investing.

Past performance is no guarantee of future results. The investment return and principal value of an investment in the Funds will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance of the Funds may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by calling 1-866-972-8848. 

This presentation is based upon information available to the public and is intended for informational purposes only. Under no circumstances is it to be used as or considered as an offer to sell, or a solicitation of any offer to buy, any security mentioned in the article.

Funds whose investments are concentrated in a specific industry or in smaller capitalized companies may be subject to a higher degree of market risk than funds those investments are diversified and may not be suitable for all investors. 

Funds distributed by Rafferty Capital Markets, LLC

Data prvided by: Center for Research in Securities Prices (CRSP), University of Chicago, National Bureau of Economic Research (NBER), and Satuit Capital Management, LLC/Satuit Funds Management, LLC.

Information provided in this article was obtained by sources deemed reliable, but no guarantee is made to the accuracy of the information.

Jim Espinales, CIMA
Director National Accounts
(973) 568-6799  

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