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Top Active US Small & Mid Cap Equities Funds

Top Active US Small & Mid Cap Equities Funds

Introduction

Following Trump’s election in 2024, US small and mid-cap stocks seem poised for a dynamic similar to 2016, with attractive performance prospects. For investors looking to capture this opportunity, we present here a selection of exceptional funds in the US Small & Mid Cap Equities category that have outperformed the Russell 2000 over the past three years.

Small and mid-cap stocks require expert management, often rare in France, as it is dominated by specialists based in the United States. Fortunately, thanks to French and American talent, these hidden gem funds, accessible through life insurance contracts and Retirement Savings Plans (PER), are referenced by EnvestBoard to simplify their selection and accessibility.

These funds do not merely beat the Russell 2000; they also display better volatility indicators, Sharpe ratios, and maximum drawdown, demonstrating their quality of management and risk control. Here is a detailed overview of each fund leading the ranking, taking into account the specific elements observed.

The Top Three Funds

3-Year Performance (EUR shares): Top 3 active funds compared to the Russell 2000 tracker

1.Federated Hermes US SMID Equity Fund (ISIN: IE00B8JBC584)

    • Management strategy: This fund adopts an active approach by selecting US small and mid-cap companies, integrating ESG (environmental, social, and governance) criteria. The objective is to generate sustainable growth by incorporating ESG factors into decision-making.
    • Management advantages: Its rigorous risk management enables lower volatility and maximum drawdown than its benchmark, the Russell 2000.
    • Performance indicators: This fund posts a 23.72% return over three years, with a Sharpe ratio of 0.4, demonstrating its ability to generate superior risk-adjusted returns.
    • Manager: Mark Sherlock, CFA, FCA, Head of US Equities and Lead Portfolio Manager at Federated Hermes Limited. Hermes Investment
    • LinkedIn profile:Mark Sherlock

2.Schroder International Selection Fund US Small & Mid-Cap Equity (ISIN: LU0248177502)

    • Management strategy: The Schroder fund focuses on US small and mid-cap companies, with selection based on fundamental analysis. It targets high-growth companies, stable stocks with predictable cash flows, and those with improvement potential not yet recognized by the market.
    • Key feature: This fund adopts a moderate ESG approach, with a commitment to maintaining a sustainability rating higher than its benchmark.
    • Performance indicators: With a volatility of 17.34% and a Sharpe ratio of 0.4, this fund also outperforms the Russell 2000 with a three-year return of 19.63%.
    • Manager : Robert Kaynor, CFA, Fund Manager at Schroders. Schroders API
    • LinkedIn profile: Robert Kaynor
    • Distribution in France: Caroline VALEMBOIS, Ugo CEZAR

3. BNP Paribas Funds US Small Cap (ISIN: LU1695653508)

    • Management strategy: This fund focuses on small-cap companies oriented toward the US domestic market with strong growth potential.
    • Management feature: This fund includes ESG criteria in its selection process, favoring the healthcare, finance, and industrial sectors, which are likely to grow in a context of US economic recovery.
    • Performance indicators: Posting a 19.18% return over three years and a volatility of 23.31%, this fund exceeds its benchmark with a well-managed risk profile.
    • Manager: Pamela Woo, Head of US Equities, Senior Portfolio Manager, BNP AM
    • LinkedIn profile: Pamela Woo
    • Distribution in France: Sylvain GHISONI, Marina PADELO, Ronite OUAKI

Risk Indicators (EUR shares): Top 3 active funds compared to the Russell 2000 tracker

Other High-Performing Funds

In addition to these three funds, three others stand out for their ability to outperform the Russell 2000 over three years:

4.Indosuez Funds America Small & Mid Caps (ISIN: LU1073906007)

    • Management strategy: This fund managed by CA Indosuez Wealth (Asset Management) aims to achieve long-term capital growth by primarily investing in US small and mid-cap equities. Its flexible approach allows it to position itself without sector restrictions.
    • Management approach: The fund uses active management and can invest in sectors outside its benchmark, the FCI USA Smallcap 2000. This strategy gives the manager the freedom to exploit specific opportunities.
    • Performance indicators: Three-year volatility stands at 18.8%, with a three-year return of 17.29%. The fund consistently outperforms its benchmark, demonstrating good risk management.
    • Manager: Laura Corrieras, Portfolio Manager, Michel Bourgon Senior Portfolio Manager, Indosuez Wealth Management
    • LinkedIn profile: Laura Corrieras, Michel Bourgon

5.FTGF Royce US Small Cap Opportunity Fund (ISIN: IE00BHBFDO36)

    • Management strategy: The Franklin Templeton Royce Small Cap Opportunity fund focuses on long-term capital appreciation by investing in US small and micro-cap stocks, with an emphasis on undervalued equities following a value investment strategy.
    • Key feature: With active, discretionary management, the fund targets securities from the Russell 2000 Value index but retains allocation flexibility to capture opportunities outside its index.
    • Performance indicators: With a three-year volatility of 25.81%, this fund posts stable performance despite market uncertainties while managing risk through enhanced portfolio diversification.
    • Manager: Brendan Hartman, Portfolio Manager, Royce & Associates
    • LinkedIn profile: Brendan Hartman

6.Neuberger Berman US Small Cap Fund (ISIN: LU0426821010)

    • Management strategy: This fund is focused on long-term growth by investing in US small-cap stocks primarily oriented toward the domestic market.
    • Management approach: Using an active strategy, the fund seeks to generate value for investors by maintaining significant exposure to the most dynamic segments of the US domestic market.
    • Performance indicators : Over three years, the fund posts a 13.13% return with a volatility of 20.14%, demonstrating rigorous risk management.
    • Manager: Brett Reiner, Neuberger Berman
    • LinkedIn profile: Brett Reiner
    • Distribution in France: Thomas ROUBACH

3-Year Performance (EUR shares): Top 6 active funds compared to the Russell 2000 tracker

Risk Indicators (EUR shares): Top 6 active funds compared to the Russell 2000 tracker

EnvestBoard Rating - 3-Year Outperformance

Each month, funds within the same category are rated based on their 3-year outperformance relative to the category average.

  • 5 stars: Top 10% of the best-performing funds.
  • 4 stars: Next 22.5%.
  • 3 stars: Next 35%.
  • 2 stars: Next 22.5%.
  • 1 star: Bottom 10% of the least-performing funds.

About the author: Yufeng Xie

Yufeng Xie is the CEO and co-founder of EnvestBoard, an innovative investment decision-support platform. A graduate of ENSAE Paris (Institut Polytechnique de Paris) with an economics background from the Sorbonne, he brings nearly 20 years of experience in asset and wealth management. Yufeng has held prestigious positions as a product structuring researcher, algorithmic trader, and fund manager at major European financial institutions.

Passionate about economic analysis, mathematics, and artificial intelligence, he founded EnvestBoard to provide advanced analytical solutions, enabling investors to make optimized and informed portfolio allocation decisions.

Please note:

Past performance is not indicative of future results. The content above does not constitute investment advice. It is an objective analysis of financial information.

Past performance is not indicative of future results. Fees are included in the performance figures. The content above does not constitute investment advice. It is an objective analysis of financial information.

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