The fund seeks capital appreciation in the long term by investing in companies across any size outside 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 focuses on foreign companies, including those located in emerging market countries.
The team seeks to identify attractive investment opportunities arising due to certain capital cycle, or supply-side conditions.
Capital cycle investing is based on the concept that the prospect of high returns will attract excessive capital and competition and the prospect of low returns will excessively depress new capital investments and discourage competition.
In addition, the team relies on fundamental analysis to evaluate businesses and the industry within which they operate.
Another important aspect of the analysis is the research meetings with company management teams.
When selecting securities for the portfolio, the team assesses if companies deploy capital efficiently, and/or company management teams are appropriately incentivized.
Other factors that the team focuses on are whether companies operate in a monopolistic, oligopolistic or consolidating industry.
In addition, the team determines if the companies are generating high and durable returns on invested capital, and attractive or improving free cash-flow.
Additionally, the research team integrates environmental, social and governance factors as part of its process.
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.
The fund maintains an aggregate portfolio that is broadly regionally neutral relative to the benchmark index.
The portfolio holds between 450 and 550 companies across Europe, Japan, the Pacific Basin and emerging markets, and North America.
The fund may invest in securities denominated in, and/or receiving revenues in, foreign currencies.