Investment Process
We believe that our comprehensive research-driven approach to stock selection offers the best opportunity to achieve superior long-term performance on a risk-adjusted basis.

The Small Cap Growth Equity portfolio management team collaborates with our fundamental and quantitative research teams, as well as the portfolio management teams for our Small Cap Core and Small Cap Value products, to identify the best opportunities in the small-cap growth arena and make timely buy and sell decisions.

Portfolio managers, along with experienced equity analysts who specialize by industry, conduct fundamental research. They have a thorough understanding of the industries and an in-depth knowledge of the companies they follow, acquired through years of experience and maintained by on-site and off-site visits with management teams, analysis of financial statements, due diligence of competitors, suppliers, customers, and products.

Our quantitative stock screening process evaluates sector-specific factors regarding valuation, business fundamentals, and catalysts and identifies stocks that have the potential to drive outperformance.

Portfolio Focus
In constructing the portfolio, the Small Cap Growth Equity management team begins by identifying secular trends (e.g., changing demographics, shift from analog to digital, difficulty in replacing energy reserves) that can provide the opportunity for above-average growth for particular industries.

The team uses a disciplined process to select companies in those affected industries that exhibit:

Compelling business fundamentals. These include above-average growth in revenue and earnings, a strong competitive position, and strong management.

Attractive valuations: Because great companies are not always great investments, we screen every potential buy candidate to determine the stock’s valuation range relative to the sector, industry, and its own history.

Catalysts: In considering each buy candidate, we look for a catalyst that may propel the growth of the stock in the near future. Catalysts may be economic or industry-related or specific to the company.

Holdings are sold if they achieve their price target or if their position exceeds portfolio parameters. We would also sell if we predict a deteriorating outlook or a significant change in company fundamentals or if a catalyst failed to materialize.

Risk Management
Aside from guiding our efforts to deliver positive performance in up markets, our disciplined investment process – specifically our strict sell discipline – helps limit downside risk. We also manage risk by being fully diversified across all sectors and continuously monitoring individual issues and sector parameters.