The fund seeks to track the total return performance of the Essential 40 Stock Index before fees and expenses by investing in companies in the United States.
The investment process starts from a list of established companies in the benchmark index and the research team utilizes quantitative techniques and fundamental analysis to identify investable opportunities.
The research team begins with an initial universe of securities with a market capitalization of at least $1 billion.
Next, the team utilizes a rules based methodology to select companies that are irreplaceable and too essential to fail in the U.S. economy.
Then the manager constructs a diversified portfolio of forty stocks that represent exposure to companies believed to be essential to the economy and the American way of life.
The final portfolio is equally weighted, and typically rebalanced annually on the second calendar Monday of January.
The manager seeks to have the Index diversified across sectors and industries and seeks only to make changes to the Index components as the American economy evolves or market events and corporate actions necessitate.
To manage risk, the fund may also invest 5% or less of its net assets in S&P 500 futures and options, although it can invest up to 20% of its net assets in such instruments.
