Serial Correlation and Micro-Cap Equities
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The information provided herein represents the opinion of Perritt Capital Management and is not intended to be a forecast of future events, a guarantee of future results, nor investment advice.
Microcap equities are defined as the 9th and 10th decile of all companies listed on the New York Stock Exchange (NYSE), American Stock Exchange (AMEX) and NASDAQ, as ranked by market capitalization, ending 12/31/2011, according to Ibbostson & Associates Classic Yearbook, 2012. Equities are defined as all ten deciles of stocks listed on the above exchanges. Long term Corporate Bonds returns are measured using the Salomon Brothers Index, which is a common American Bond index, akin to the S&P 500 for stocks, originally owned by Salomon Brothers and now run by its successor, Citigroup. Long Term Government Bond returns are measured from data constructed from the Wall Street Journal and the Government Bond Fil at the Center for Research in Security Prices (CRSP). Large cap equities are defined as the S&P 500 Index. The Consumer Price Index is used to measure inflation. Real interest rates are interest rates that have been adjusted to remove the effects of inflation. Equity Premia is defined as the excess return that a group of stocks or the overall stock market provides over a risk-free rate. Bond Premia is defined as the net return from investing in long-term corporate bonds rather than long term government bonds. Serial Correlation can be applied to premia to provide a measure of degree of correlation in asset returns. The chart titled Micro-Cap Equities Have Provided Strong Long-Term Returns illustrates the performance of a hypothetical $1 investment in Large Cap Stocks as measured by the S&P 500 and Microcap equities as measured by Ibbostson & Associates. Assumes reinvestment of dividends and capital gains, but does not reflect the effect of any applicable sales charge or redemption fees. This chart does not imply any future performance.
Past performance does not guarantee future results. Index performance is not illustrative of fund performance. You cannot directly invest in an index. For fund performance, visit www.perritmutualfunds.com or click here.
Mutual fund investing involves risk. Principal loss is possible. The Funds invest in smaller companies, which involve additional risks such as limited liquidity and greater volatility. The Funds invest in micro cap companies which tend to perform poorly during times of economic stress. The Ultra MicroCap Opportunities Fund may invest in early stage companies which tend to be more volatile and somewhat more speculative than investments in more established companies.
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