- Fiera Capital is exiting its Canadian small and micro-cap equity strategies, affecting approximately C$1.2 billion in assets under management
- The move reflects broader challenges in scaling small-cap investments, including liquidity constraints and market volatility
- This shift may benefit specialized asset managers, as institutional and retail investors seek new avenues for small-cap exposure
- Fiera Capital stock (TSX:FSZ) opened trading at C$6.72
In a move that has sent ripples through Canada’s investment community, Fiera Capital Corp. (TSX:FSZ) announced its decision to wind down its Canadian small and micro-cap equity strategies, impacting approximately C$1.2 billion in assets under management (AUM). This pivot marks a significant moment in the evolution of small-cap investing in Canada, raising critical questions about the viability, liquidity, and competitiveness of this asset class.
This content has been prepared as part of a partnership with Fiera Capital Corp. and is intended for informational purposes only.
Why Fiera’s exit matters
Fiera Capital has long been a prominent player in the Canadian asset management landscape, with a diversified portfolio spanning global equities, fixed income, and alternative investments. Its retreat from small and micro-cap strategies is not merely a tactical reallocation—it reflects deeper structural challenges facing the segment.
Implications for retail and institutional investors
Retail investors
For individual investors, especially those accessing small-cap exposure through mutual funds or managed portfolios, Fiera’s exit may limit available options. Small-cap strategies often offer higher growth potential but come with greater volatility and lower liquidity. With fewer large firms offering these products, retail investors may need to turn to boutique managers or direct stock selection, which requires more research and risk tolerance.
Institutional investors
Pension funds, endowments, and family offices that relied on Fiera’s scale and infrastructure may now face a gap in their Canadian equity allocations. The exit could prompt a reassessment of portfolio construction, potentially shifting capital toward mid-cap or global small-cap strategies. It also points directly to the need for due diligence in manager selection, especially in niche segments.
Liquidity and volatility challenges
Small-cap stocks are inherently less liquid than their large-cap counterparts. This poses challenges for asset managers trying to deploy or withdraw large sums without significantly impacting prices. Fiera’s decision may reflect the difficulty of scaling small-cap strategies while maintaining performance and managing risk.
Moreover, small-cap stocks are more sensitive to macroeconomic shocks, regulatory changes, and investor sentiment. In periods of market stress, they tend to underperform due to flight-to-safety behavior. This volatility can be exacerbated when large managers exit the space, potentially leading to price dislocations and reduced analyst coverage.
The role of specialized vs. diversified asset managers
Fiera’s exit highlights a growing divide between specialized asset managers and diversified firms. While large firms may struggle to justify the operational complexity and lower margins of small-cap strategies, boutique managers often thrive by focusing on deep research, active engagement, and long-term conviction.
Specialized managers are in a better position to:
- Navigate liquidity constraints
- Identify under-the-radar opportunities
- Build concentrated portfolios with high alpha potential
This shift may ultimately benefit investors who seek high-touch, actively managed strategies, but it also demands greater scrutiny and trust in the manager’s expertise.
Looking ahead: Opportunity amid uncertainty
While Fiera’s exit may seem like a setback, it could also signal a turning point. As capital exits the space, valuations may become more attractive, creating opportunities for contrarian investors. Additionally, the rise of ESG investing, technological innovation, and regional economic development could fuel growth in sectors where small-cap companies are dominant.
Investors willing to embrace the complexity of small-cap investing—and partner with the right managers—may find themselves well-positioned to capitalize on the next wave of growth.
About Fiera Capital Corp.
Fiera Capital is a global independent asset manager offering tailored multi-asset investment solutions. The firm serves institutional clients, financial intermediaries, and private wealth investors across North America, Europe, Asia, and the Middle East, with expertise spanning both public and private markets.
Fiera Capital stock (TSX:FSZ) opened trading more than a per cent and a half lower at C$6.72 and has lost 27.16 per cent since the year began, on top of a 14.68 per cent drop since this time last year.
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