The fund seeks capital appreciation in the long term and income by investing in small-size companies in the United States.
The sub-adviser’s investment process starts with a list of companies in the benchmark index and the research team utilizes quantitative techniques and fundamental analysis to identify investment opportunities.
Next, the research team invests principally in U.S. companies but may invest to a lesser extent in non-U.S. companies.
In selecting securities for the portfolio, the research team employs three distinct small-cap strategies or sleeves.
In the Quantitative Core sleeve, the team utilizes a proprietary alpha model which blends behavioral factors (e.g., human behaviors and biases) and intrinsic valuation factors (e.g., tangible measures of a company’s underlying worth).
The Fundamental Growth sleeve focuses on identifying high quality companies in relatively early stages of their growth trajectory.
The Managed Volatility sleeve selects companies which in aggregate offer lower forecast risk and lower levels of correlation among the individual stocks.
Then the manager constructs a portfolio of stocks from a list of companies favored by the research team and allocates capital based on its conviction level.
In addition, the fund may invest a substantial portion of its net assets in securities issued in initial public offerings.
Also, the fund may invest up to 15% of its net assets in non-U.S. securities, except that it may invest without limit in American Depositary Receipts.
The fund may also invest a portion of its net assets in real estate investment trusts.
In order to gain exposure to desired asset classes or securities, or for hedging or other investment purposes, the fund may also utilize foreign currency exchange contracts, options, stock index futures contracts, warrants and other derivative instruments.