Baird Equity Opportunity Fund - Investor Class (BSVSX)

MILWAUKEE--(BUSINESS WIRE)--Baird Funds today launched the Baird Small/Mid Cap Value Fund (BMVIX/BMVSX). The Fund will be managed by Michelle Stevens, who also manages Baird Small Cap Value Fund (BSVIX/BSVSX). “This fund is a natural extension of our value equity team’s product offerings,” said Reik Read, Managing Director. “Michelle has a 15-year history managing small/mid value accounts for institutional clients, so we are pleased to expand our stock fund line up to provide an additional vehicle for investors.” The Baird Small/Mid Cap Value Fund will seek long-term capital appreciation by investing in a diversified portfolio of common stocks of companies with small to medium market capitalizations. Click here to read the prospectus. Said Michelle Stevens, Senior Vice President and Portfolio Manager, “This fund combines the benefits of small and mid cap investing in one portfolio. Both small and mid cap stocks tend to grow faster, and a ‘SMID’ portfolio allows us to hold on to growing small cap companies longer as they grow into the mid cap range.” Click here for a Q&A with Stevens discussing her investment approach. About Baird Funds The Baird Funds are a family of fixed income and equity mutual funds including Baird Ultra Short Term Bond, Baird Short Term Bond, Baird Short Term Municipal Bond Fund, Baird Intermediate Bond, Baird Quality Intermediate Bond Fund, Core Intermediate Municipal Bond, Baird Aggregate Bond, Baird Core Plus, Baird Small Cap Value, Baird Small Mid Cap Value, Baird Mid Cap and Baird Large Cap. About Baird Baird is an employee-owned, international wealth management, capital markets, private equity and asset management firm with offices in the United States, Europe and Asia. Established in 1919, Baird has more than 3,200 associates serving the needs of individual, corporate, institutional and municipal clients. Baird has $152 billion in client assets. Committed to being a great place to work, Baird ranked No. 5 on FORTUNE’s 100 Best Companies to Work For in 2015 – its 12th consecutive year on the list. Baird’s principal operating subsidiaries are Robert W. Baird & Co. in the United States and Robert W. Baird Group Ltd. in Europe. Baird also has an operating subsidiary in Asia supporting Baird’s investment banking and private equity operations. For more information, please visit Baird’s Web site at www.rwbaird.com. Investors should consider the investment objectives, risks, charges and expenses of each fund carefully before investing. This and other information is found in the prospectus and summary prospectus. For a prospectus or summary prospectus contact Baird Funds directly at 800-444-9102 or contact your Baird Financial Advisor. Please read the prospectus or summary prospectus carefully before investing. There is no guarantee that the strategy of the fund will be profitable or protect against loss. The fund invests in the stocks of small- and mid-capitalization companies. These companies often are more volatile, have fewer resources to weather adverse economic or market conditions and generally face greater risks than large-cap companies.

MILWAUKEE--(BUSINESS WIRE)--Michelle Stevens, CFA, has dedicated her investment career to finding undervalued small cap stocks. “Our team’s investment process is best suited for researching smaller sized companies,” said Stevens. Stevens recently answered a few questions about her commitment to small caps and her current investment strategy: Why do you believe that active management can beat indexing in the small cap space? The most important reason is that there are significant inefficiencies in the small cap space which create more opportunities for proprietary fundamental research to add value. Fewer Wall Street analysts follow these companies. The probability that small companies will produce results that are significantly better than consensus expectations is high. Unlike big companies that have sales and revenue that are far more predictable, smaller companies work off of a smaller base with far more variable revenues and profits. There are more catalysts for surprises and those surprises actually have an impact. Small changes in a product line don’t move the needle at P&G, but can have a real impact at a small company. Financials have been a part of your portfolio consistently over the years and have recently contributed to your results. How do you view financial stocks at different points in the cycle? Over time, we’ve done some dramatic repositioning in financials. Today, we see the positive changes in economic growth, housing, and improved credit quality as a signal to gain more leverage to higher rates and the improving economy. We’ve added more banks to our portfolio. With an economy that has come full circle, the environment has stabilized and begun to improve, led by housing, with inflation remaining under control. While we don’t expect robust growth, we are buying some companies with economic sensitivity and leverage to rising rates including some commercial banks, debt recovery specialists, and insurers including Portfolio Recovery Associates (PRAA), Bank of Internet (BOFI), and AmTrust Financial (AFSI). Our financials exposure today at over 40% exceeds the index weight of 38%. While you are primarily a stock picker, you have a macroeconomic overlay that drives some of your stock selection. Can you describe it? We look at the broader economy and overweight some sectors based on our outlook. Right now, we think there is risk in the Eurozone and emerging markets. While the US still sees some headwinds from residential housing, credit and labor markets, we expect US markets to perform better and have shifted our portfolio to companies more exposed to the US market than to Europe or emerging markets. Companies with the most exposure to foreign sales have seen the worst stock price performance. The types of companies we like in this environment include value proposition retailers, low-price consumable brands and rent-to-own. We like companies such as Rent-a-Center, Inc. (RCII), Jarden Corp (JAH), Dollar Tree Inc. (DLTR), and Hanesbrands (HBI). We also continue to invest in infrastructure plays that are leveraged to growing energy demand, including pipelines for domestic shale plays such as MasTec (MTZ) and companies that benefit from power distribution upgrades such as Valmont Industries (VMI). We like the commercial aircraft industry, such as component manufacturer Hexcel (HXL). And we continue to invest in the secular trend toward the growth in online services such as internet-based banking and retail, domain registries, online bill play, cloud services and digital media. What is your outlook for small value stocks? This year, small stocks have outperformed, especially those whose primary business is domestic. In periods of economic recovery, small caps tend to do better and are more leveraged to economic growth. We look at PEG Ratios (P/E/annual growth rate) as a measure of stocks’ value relative to its growth. Consider the forward revenue growth rates, P/E ratios and PEG ratios for various indices. 2014ERevenue Growth 2014Price/Earnings Revenue PEGRatio Source: Cornerstone Macro – July 23, 2013 Historically, small caps have had better revenue growth than large caps and we think the market will pay for growth. A number of your stocks pay dividends. Do you look for dividend payers when selecting companies? Our portfolio yield is usually in the ballpark of the benchmark, and most of the yield is concentrated in our REIT or utility holdings. Most of our stocks do not pay dividends however. We look for companies with good organic growth prospects who will use their cash to invest in their own growth versus paying out cash to shareholders in the form of a dividend. In our view, if a company can re-invest in their business and earn 15-20%, we’d prefer that to a dividend. About Michelle Stevens, CFA Michelle Stevens is Senior Portfolio manager and has more than 18 years of investment industry experience, having managed mutual funds, sub-advised funds and institutional separate accounts in the Small-, Small-/Mid- (SMID) and All-Cap Value Equity disciplines. Stevens is the manager of the Baird Small Cap Value Fund (NASDAQ: BSVIX, BSVSX). She holds an MBA from the University of Cincinnati and received her bachelor’s degree in economics from Wittenberg University. She also holds the Chartered Financial Analyst designation. About Baird Baird is an employee-owned, international wealth management, capital markets, private equity and asset management firm with offices in the United States, Europe and Asia. Established in 1919, Baird has approximately 2,800 associates serving the needs of individual, corporate, institutional and municipal clients. Baird had more than $100 billion in client assets on March 31, 2013. Committed to being a great place to work, Baird ranked No. 14 on FORTUNE’s 100 Best Companies to Work For in 2013 – its tenth consecutive year on the list. Baird’s principal operating subsidiaries are Robert W. Baird & Co. in the United States and Robert W. Baird Group Ltd. in Europe. Baird also has an operating subsidiary in Asia supporting Baird’s investment banking and private equity operations. For more information, please visit Baird’s Web site at www.rwbaird.com. Performance data quoted represents past performance. Past performance does not guarantee future results. This is not a complete analysis of every material fact regarding any company, industry or security. The opinions expressed here reflect our judgment at this date and are subject to change. For additional information on the securities mentioned contact us at 1-800-792-4011. Please click here for information concerning the Small Cap Value Composite holdings. Small cap stocks may be subject to a higher degree of risk than more established companies’ securities. Securities of small and mid-size companies may be more volatile, less liquid and face greater risks and price fluctuations than larger, more established companies. The Russell 2000 Value Index measures the performance of the Russell 2000 companies with lower price-to-book ratios and lower forecast growth values. Indices are unmanaged and are not available for direct investment.