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Oakford Park Wealth

Small Cap Value Equity Portfolio

Small Cap Value Portfolio IB Asset Management

The Small Cap Value portfolio is a portfolio designed to systematically deliver return and risk characteristics of small cap value stocks within the US equity market. The portfolio is implemented using a rules-based approach and offered at a relatively low cost.

A factor-based approach to portfolio construction is grounded in academic research. The goal is to achieve an alternative risk-return profile, which is more attractive than a simple capitalization-weighted index such as the Russell 2000. 

The portfolio is constructed using a rules-based algorithm to determine position allocations. The portfolio is rebalanced quarterly and stocks exhibiting attractive value characteristics have a greater chance of being included.

Allocation discipline
The portfolio targets an allocation of 300 long positions. Stocks with attractive valuation ratios receive higher allocations, and both trailing and forward price-earnings valuation ratios are considered when determining allocations. This contrarian approach to stock selection allows us to allocate capital to companies that may be out of favor with the market, but poised for recovery. As a form of risk control, the portfolio construction process is designed to penalize high volatility in stocks and avoid excessive concentration in single sectors of the market.

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