The small cap-based Russell 2000 index may be trailing the S&P 500 by four percentage points so far in 2015, but don’t give up on the market’s minnows just yet, said Ralph Bassett, head of North American Equities for Aberdeen Asset Management. 'Smaller cap companies have been investing in their businesses more aggressively than taking margin, such that earnings growth while healthy has been less pronounced and less stable,' said Bassett. 'That said we think going forward there is margin opportunity for small cap companies relative to their larger counterparts.' Bassett added that small cap companies are able to handle higher interest rates better than some market pundits believe. In his view, small caps have domestically focused businesses and do not have to battle the headwind of a stronger dollar. Bassett is also portfolio manager for the Aberdeen Small Cap fund (GSXAX), which is up 8.9% so far in 2015. Bassett said he is bullish on WSFS Financial (WSFS), which is up 30% year-to-date. He said the Delaware-based lender’s stock has room to run as it takes share from smaller community banks that had trouble emerging from the financial crisis. He is also positive on Prestige Brands (PBH), up 37% this year, due to its ability to acquire new brands and invest smartly to develop its current stable.

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