4Q17 Small Cap Value Fund Commentary

The Tax Cuts & Jobs Act was the big event in the fourth quarter. Newly competitive global tax rates should remove the disincentive to invest in the U.S. and repatriate $2 trillion of trapped cash. However, the earnings benefit is likely vastly overstated as most analysts assume all the tax savings drop to the bottom line. Excluding some tech monopolies, virtually all public companies are in fiercely competitive industries. Like any large cost, tax savings eventually will be partially reinvested or competed away in the form of lower prices or higher wages.