The market's minnows are swimming away from its whales as the Russell 2000 Index is up about 8% compared with the 5% gain in the S&P 500. Ralph Bassett, portfolio manager for the Aberdeen US Small Cap Equity Fund GSXAX, says there are a slew of good reasons for the surge in small caps. "They get more domestic orientation so they have less volatility and overseas revenue. Meanwhile, M&A activity in the sector is holding strong," says Bassett. Bassett is particularly bullish on Parexel International (PRXL) . Shares of the biopharmaceutical services company, which provides clinical research and logistics, are flat year-to-date. He is also positive on shares of G-III Apparel Group (GIII) , down 37% year-to-date, saying the company's management is strong enough to get through its short term issues surrounding its Donna Karan acquisition. Finally, Bassett is a fan of Quaker Chemical (KWR) , up 35% thus far in 2016, saying the company's "robust business model" gives it room for margin expansion.

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