The fund seeks capital appreciation in the long term by investing in 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 invests a significant portion of the fund’s net assets in equity securities.
The research team favors companies that exhibit the potential for superior sales and earnings growth rates with a competitive advantage.
Also, the team focuses on companies with an efficient management team whose interests are aligned with those of shareholders.
In addition, the team prefers innovative companies that encourage disruption utilizing technology to maximize efficiencies, gain pricing advantages, and take market share from competitors.
The team defines innovative companies that have the ability to advance new products or services through investment in research and development, that operate a business model that is displacing legacy industry incumbents, that are pursuing a large unmet need or total available market, and/or that are benefitting from changes in demographic, lifestyle, or environmental trends.
Also, the team assesses how management teams allocate capital in order to drive future cash flow.
Other valuation multiples the team focuses on are based on earnings, book value, operating profit margin trends, enterprise value to EBITDA and free cash flow yield.
In addition to meeting with management, the team also surveys a company’s vendors, distributors, competitors and customers.
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 invest in any sector, and at times may emphasize one or more particular sectors.
Also, the fund invests up to 25% of its net assets in equity securities of foreign issuers through ADRs and similar investments.