By Chuck Hastings, Portfolio Manager,
B. Riley Diversity Equity Fund
After an ugly second half of 2015, the U.S. equity markets struggled to deal with the bad news and negative data facing investors at the start of the New Year. Small-cap companies were negatively affected and reached new 52 week lows in early February. Markets have since rallied significantly and the volatility index has fallen, but the Russell 2000 Index remains down from the highs reached last June. The market’s roller coaster ride seems to have paused for the time being, but we expect to see continued volatility in both directions for the remainder of the year.
The bull market that followed the sub-prime crisis of 2008 allowed many investors to grow complacent. Fundamental company research and analysis which we believe is necessary to outperform the market, has been replaced with an index ETF strategy by some money managers. The B. Riley Diversified Equity Fund focuses on active management and deep fundamental research of individual companies as a way to provide our clients with a competitive advantage over other investment strategies.
As of November 2015, we have altered the Fund’s strategy to be more concentrated and narrowly focused. Going forward, the portfolio will be limited to the best ideas of the B. Riley & Co. LLC Research Department. There are currently 28 companies in the Fund, and we continue to focus on the small and micro-cap spaces.