Consistent Philosophy
Proven and profitable businesses undergoing multiyear catalysts can provide significant opportunities for outperformance
Style agnostic
We apply our philosophy across the valuation spectrum and expect to deliver alpha as some companies transition from value to growth
Risk controlled
We seek to maintain risk levels equivalent or below that of the broader market through a business cycle
SFDR Product Information*
Read more about SFDR including information on our Article 8 and 9 funds
*Sustainable Finance Disclosure Regulation
We believe many mature domestic companies are relatively efficiently valued by the marketplace given abundant access to information across financial markets. That said, a keen focus on understanding the effects of long-run change on companies and industries provides opportunity to generate positive risk adjusted excess return within a mid to large cap universe of stocks. A focused portfolio of 40-50 holdings allows us to avoid companies undergoing competitive disruption or undifferentiated growth while owning only those businesses likely to see improved profitability and/or growth that is not properly discounted at today’s valuation levels.
Performance in differing market environments
Equity returns have experienced discreet periods of value or growth leadership. We embrace the flexibility inherent in a “core” mandate to actively manage the portfolio according to evolving opportunities.
Exposure to quality
We focus only on proven, cash generative companies with a record of profitability and competitive differentiation, resulting in a portfolio of stocks with return levels well-above the cost of capital.
Active risk management
We expect through-cycle risk metrics to be in-line to below that of our benchmark. Additionally, we expect to manage the expected contribution to active return from style bias.
Utilize proprietary in-house research to uncover businesses undergoing positive long-run change
- New market opportunities, secular adoption, cyclical inflections, macro/political shifts
Analyze the source of competitive advantage
- Avoid companies with apparent growth catalysts but unsustainable financial models
Pay attention to valuation
- Timeliness matters with respect to entry/exit points
- Ensure current price is supported by expectation for future growth and cash generation with a margin for error
- Avoid ‘over-hyped’ ideas
Construct portfolio
- 40-50 positions across most market sectors
- Companies with identifiable catalysts at reasonable valuations
Risk Management
- Active sizing of positions to achieve desired risk exposures
- Limit total risk and style-specific risk
For more information on our equity capabilities
Risks
The value of the portfolio may fall as well as rise, and you may not receive back the amount invested.
As a class, equities carry higher risks than bonds or money market instruments.
Concentration risk: Because the strategy expects to hold a concentrated portfolio of a limited number of securities, the strategy's risk may be increased because each investment has a greater effect on the strategy's overall performance. We maintain a diversified portfolio representing a number of different industries, which helps to minimize the impact that any one industry could have on the portfolio.
Hybrid securities risk: The Strategy may invest in preferred stock and hybrid securities, which may have special risks. Preferred and hybrid securities may include provisions that permit the issuer, at its discretion, to defer distributions for a stated period without any adverse consequences to the issuer. Some preferred and hybrid securities are non-cumulative, meaning that the dividends do not accumulate and need not ever be paid. A portion of the Strategy’s assets may include investments in noncumulative preferred or hybrid securities, under which the issuer does not have an obligation to make up any arrears to its investors. Preferred and hybrid securities may be substantially less liquid than many other securities, such as common stocks or US government securities. Generally, preferred and hybrid security holders (such as the Strategy) have no voting rights with respect to the issuing company unless preferred dividends have been in arrears for a specified number of periods, at which time the security holders generally may select a number of directors to the issuer’s board. Generally, once all the arrears have been paid, the security holders no longer have voting rights. In certain varying circumstances, an issuer of preferred or hybrid securities may redeem the securities prior to a specified date. For instance, for certain types of preferred or hybrid securities, a redemption may be triggered by a change in federal income tax or securities laws. A redemption by the issuer may negatively impact the return of the security held by the Strategy.
Derivatives risk: Certain derivatives could increase the Strategy’s volatility or expose the Strategy to losses greater than the cost of the derivatives.
Market risk: The risk that all or a majority of the securities in a certain market — like the stock market or bond market — will decline in value because of factors such as adverse political or economic conditions, future expectations, investor confidence, or heavy institutional selling.
Liquidity risk: Liquidity risk is the possibility that securities cannot be readily sold within seven days at approximately the price at which a Strategy has valued them.
Performance risk: Performance risk broadly refers to the potential for changes in share prices to result in a loss in the value of your investment in the Strategy. The Strategy primarily invests in companies that are listed on a share market and as a result is exposed to movements in their share prices.
Currency risk: Currency risk is the risk that the value of a Strategy’s investments may be negatively affected by changes in foreign currency exchange rates. Adverse changes in exchange rates may reduce or eliminate any gains produced by investments that are denominated in foreign currencies and may increase any losses.
IBOR risk: IBOR risk is the risk that changes related to the use of the London interbank offered rate (LIBOR) or similar rates (such as EONIA) could have adverse impacts on financial instruments that reference these rates. The abandonment of these rates and transition to alternative rates could affect the value and liquidity of instruments that reference them and could affect performance.
Disruption risk: The disruptions caused by natural disasters, pandemics, or similar events could prevent the Strategy from executing advantageous investment decisions in a timely manner and could negatively impact the Strategy’s ability to achieve its investment objective and the value of the Strategy’s investments.
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