SAN FRANCISCO — Wentworth, Hauser & Violich, building on the success of its active domestic small-cap equity strategy, is thinking even smaller.
The San Francisco-based equity manager, with $8 billion in assets under management as of March 31, will add a U.S. microcap equity strategy to its lineup in the third quarter. The new strategy has been on the drawing board since April, 2005, said Steven Rhone, chief executive officer.
The small-cap strategy, which closed to new investors in January, had $2.3 billion in assets as of March 31, up 65% from $1.4 billion the prior year, said Jeffrey Romrell, managing director. The strategy returned 16.47% in 2005, compared with a 4.55% gain by the Russell 2000 index, according to figures supplied by WHV.
Timothy Allen, a senior vice president, portfolio manager and senior security analyst, will spearhead the microcap equity strategy under a multimanager approach, Mr. Romrell said, similar to its approach on other strategies. Other portfolio managers have not yet been determined, he added.
The Dow Jones Wilshire U.S. Micro-Cap index will be the new strategy's benchmark. Fees are still being worked out, Mr. Romrell added.
The microcap equity offering will mimic the small-cap equity strategy in several ways, choosing holdings based on fundamentals such as earnings per share, revenue growth, and presence of a quality management team, Mr. Romrell said. It also will employ the same growth-at-a-reasonable-price orientation.
Michael Binz, senior research analyst at Hammond Associates, a consulting firm in Clayton, Mo., said demand for microcap equity strategies is increasing because of the asset class' "outstanding performance." The Dow Jones Wilshire U.S. Micro-Cap index is up 6.48% for the five months through May 31, and 19.86% for the year ended May 31.