Paradigm Asset Management Co. LLC, manager of quant-active equity strategies for institutional investors, has launched a high capacity Small Core Strategy designed to provide investors greater active exposure to a wide range of small cap stocks.
The Small Core Strategy officially launched in the fourth quarter of 2007 and has already received traction.
“We not only have interest from a number of institutional investors in the Small Core Strategy, but we’ve already received funding from two plans. Our firm’s aim is to create compelling, cutting edge product choices that suit the dynamic needs of our clients and we think this early interest and commitment from these institutions validates our efforts and expertise,” says James Francis, president and CEO, Paradigm.
“Many large institutional plans are unable to achieve an optimum active exposure to small cap stocks, due to their size,” adds Francis. “We created the Small Core Strategy because we recognized that many institutional investors, who would prefer to have access to an alpha rich small cap approach with consistent reliable performance, have been shut out due to capacity constraints and have had to settle for passive exposure. We believe this new strategy will help fulfill those needs.”
According to Greg Pai, managing director, Paradigm, the Small Core Strategy is representative of Paradigm’s next generation products that feature security level research more akin to fundamental analysis combined with the breadth of coverage typically associated with pure quantitative products.
“It leverages our research database designed to identify key performance drivers within the small cap style. In addition, it incorporates Paradigm’s AlphaMax ranking process that is applied to a proprietary universe of over 2000 securities on a monthly basis. This process allows the portfolio to dynamically track the pulse of small cap in terms of security, sector and fundamental leadership.
“In keeping with the firm’s overall investment philosophy, we use our distinctive research resources and 17 years of small cap investment experience to achieve superior returns while reducing unintended risk for our institutional clients,” says Pai.
Francis said that the Small Core product was designed to produce 4% 5% annualized excess return with a 3% 4% tracking error relative to the Russell 2000 Index.
The Small Core portfolio will be managed utilizing a team approach led by Francis, Pai and Jeffrey Marcus, senior portfolio manager at Paradigm.