Investors The State of Small Caps Three top managers put a roiling market in perspective. Undiscovered Manager 78 Consistency and Continuity 82 Castles in the Sky Sector Snapshot: Technology MORNINGSTAR CONVERSATION Dan Culloton Sector Rap 85 86 User Profile Investing in Youth The conventional wisdom: Investing in small companies comes with extra risks but also greater rewards for active managers who can add value in a less efficient market. Yet assets are flowing to passive funds across the marketcap spectrum-while the strategic-beta industry is boiling down active management to simple sets of factors that can be packaged and sold at lower cost. Meanwhile, a weak dollar and Andy Adams, executive vice president and portfolio manager at Mairs & Power. 72 Morningstar October/November 2017 global growth are benefiting large corporations more than smaller companies, and anticipated post-election policy changes that were expected to boost small caps haven't yet panned out. For insight, we turned to three leading small-cap portfolio managers who run funds rated Morningstar Medalists by our research analysts: Andy Adams, lead manager of Mairs & Power Small Cap MSCFX; Don San Jose, who runs JPMorgan Small Cap Equity VSEIX; and JB Taylor of Wasatch Small Cap Growth WAAEX and Wasatch Core Growth WGROX. All three Don San Jose, managing director and portfolio manager at J.P. Morgan Asset Management.