ATLANTA, Oct. 9, 2013 /PRNewswire/ -- RidgeWorth Investments' just released publication, "The Overlooked Potential of Small Cap Growth Funds: The importance of growth investing in retirement plan portfolios" suggests adding diversified small cap growth funds to retirement plans for added growth. With most Americans lacking adequate funds for retirement, many tend to favor conservative investing strategies to protect their savings. But for those with retirement shortfalls, RidgeWorth Investments suggests considering incorporating a small cap strategy to provide additional stock and sector diversification while adding only moderate volatility.
According to the U.S. Department of Labor (DOL), the retirement outlook for the majority of Americans is bleak. The DOL estimates the average retiree needs 75-85 percent of their pre-retirement income to sustain their current lifestyle and many studies have shown that Americans have not saved near enough and are allocated too conservatively to make up this shortfall. "For years, equity allocations in defined contribution plans have been shifting away from domestic equities to favor more conservative bond and hybrid funds. These flows indicate performance chasing, but historically the outperformance of these asset classes will run its course, leaving investors with outsized negative performance," said Chris Guinther, Senior Portfolio Manager of the RidgeWorth Small Cap Growth Stock Fund (SCGIX).
Despite the high volatility typically associated with small cap growth funds, they have historically offered the greatest capital appreciation over the long run. "Small cap companies tend to grow faster than their mid-size and large counterparts because they have more potential for rapid revenue and earnings growth due to innovative products and services," said Guinther. "The inclusion of small cap equity in a retirement portfolio may provide more opportunity to capture the upside of the equity markets, especially when those investors stick with a consistent allocation over time," he added. Over the past few years, money has flowed toward dividend-oriented value stocks and away from small caps—but during the first half of 2013, the small cap sector experienced inflows, suggesting a return to a longer term trend favoring this asset class.
The RidgeWorth Small Cap Growth Stock Fund may be an attractive option for retirement plan participants seeking an allocation to small cap growth. The Fund employs a stock selection strategy that seeks companies that possess above-average sustainable earnings growth, positive secular trends and disruptive products or services, meaning the potential to change the business landscape. By refusing to be limited by the traditional definition of growth, the Fund's team seeks to unearth growth in places off the beaten path, in companies that might not even be on the radar of traditional growth managers.
The paper concludes that for retirement plan investors, an allocation to small cap equities has historically contributed to long term growth. A diversified small cap growth fund that distinguishes itself via fundamental stock selection may add even greater growth potential without significantly increasing volatility.
During an upcoming webinar hosted by Financial Planning Magazine, Guinther and Senior Portfolio Manager Michael Sansoterra will share their thoughts on small cap growth and how funds in that asset class, when carefully selected, may provide solid long term growth potential. The webinar will take place on October 23rd at 2 pm ET and participants may register by visiting here.
For a copy of the white paper visit https://www.ridgeworth.com/news-insights/ridgeworth-research.
About RidgeWorth Investments
RidgeWorth Investments serves as a holding company that owns interests in six investment boutiques with approximately $47.6 billion of assets under management as of June 30, 2013. RidgeWorth's investment boutiques manage a wide variety of investment disciplines across the fixed income, equity, and liquidity management asset classes. Our boutiques provide investment management services to a growing client base that includes endowments, foundations, corporations, healthcare organizations, municipalities, public funds, associations, insurance companies, labor unions and high net worth individuals. In addition, RidgeWorth serves as the investment adviser to the RidgeWorth Funds mutual fund family. RidgeWorth Investments is a trade name for RidgeWorth Capital Management, Inc., an investment adviser registered with the SEC headquartered in Atlanta. For more information about RidgeWorth, visit www.ridgeworth.com.
The assertions in this press release are based on RidgeWorth's opinion. Performance information regarding small cap growth stocks reflect historical data and may not be predictive of future performance.
Investment Risks: Equity securities (stocks) are more volatile and carry more risk than other forms of investments, including investments in high grade fixed income securities. Small-capitalization funds typically carry additional risks since smaller companies generally have a higher risk of failure.
An investor should consider the funds' investment objectives, risks, and charges and expenses carefully before investing or sending money. This and other important information about the RidgeWorth Funds can be found in the fund's prospectus. To obtain a prospectus, please call 888- 784-3863 or visit www.ridgeworth.com. Please read the prospectus carefully before investing.
© 2013 RidgeWorth Investments. RidgeWorth Investments is the trade name for RidgeWorth Capital Management, Inc., an investment adviser registered with the SEC and the adviser to the RidgeWorth Funds. RidgeWorth Funds are distributed by RidgeWorth Distributors LLC, which is not affiliated with the adviser. Collective Strength Individual Insight is a federally registered service mark of RidgeWorth Investments.
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