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The Effect of Rising Rates on Small Cap Strategies

GIM Small Cap Portfolio Manager, Jordan Irving, discusses how the rise in interest rates may affect small caps – and the opportunities for positive-earning companies. 

Investment Objective

Long-term capital appreciation consistent with reasonable risk to principal.

The team seeks to create an actively managed portfolio invested in undervalued, higher-quality stocks, with company specific catalysts seeking to outperform the benchmark over a full market cycle.

Key Tenets of Our Approach


  • All securities in the Russell 2000 plus any additional stocks with a capitalization less than $5 billion with a minimum of 3 sell side estimates


  •  Russell 2000 Index

  Operating Target

  • Typically 85-100 holdings
  • Initial target weightings up to 2%
  • All sectors represented

Limiting Exposure

  • Sector weights: +/–50% of benchmark (except sectors <7% of Index, which can range from nominal to 10%)
  • Maximum position size: 3%
  • Maximum cash position: 3%

The Russell 2000 Index is an unmanaged, market value weighted index, which measures performance of the 2,000 companies that are between the 1,000th and 3,000th largest in the market.

One cannot invest directly in an index.

This website is for informational purposes only. GIM products are actively managed and their characteristics will vary. All investment has risk, including the risk of loss of principal. There can be no assurance that efforts to manage risk or to achieve any articulated investment objective will be successful. An investor should consider investment objectives, risks, charges and expenses carefully before investing. For additional information regarding risks and about the firm, please refer to Related Literature and Disclosures.

Negative Earners in Small Caps: The Saga Continues

A monochrome image of a building featuring a metallic exterior.
Beyond the Surface
Beyond the Surface: Peripheral Impacts of a Higher Cost of Capital on Small Cap Markets In our October 2020 paper “Why Profitability Matters: Positive Versus Negative Earnings,” ...
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