The fund seeks capital appreciation in the long term by investing in small-and mid-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 takes both long and short positions in publicly traded common stock.
On the long side, the team invests in securities of companies, whose fundamentals (such as growth prospects and appropriate capital) combined with attractive valuations, indicate significant upside opportunity relative to downside risk.
In addition, the team reviews company balance sheets.
On the short side, the team takes positions in securities of companies with weak or deteriorating fundamentals, which, combined with unattractive valuations, indicate significant downside risk.
In selecting securities for the portfolio, the research team focuses on companies are trading at a discount to their estimated intrinsic value and whose future earnings power is not reflected in their current valuations.
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 may also hold positions in foreign securities, and may, at times, focus its investments in companies in the financial services industry.
Additionally, the fund also may purchase or sell (write) index futures contracts or options on index futures contracts on a temporary basis in lieu of investing in equity securities.
