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Investment in the Portfolio entails certain risks. Investment returns and principal value of the Portfolio will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Some of the principal risks of investing in the Portfolio include:
Attractive Growth Potential
Unconstrained by market size or style, we are free to pursue US companies with strong cash flows, shareholder-friendly actions and the potential to deliver earnings growth above estimates for the next three to five years.
High Quality Business
Disciplined bottom-up fundamental research identifies high-quality, reasonably-valued medium and large capitalization US companies. It also balances a long-term outlook with near-term risks to find stocks that aim to deliver returns through changing market environments.
Risk Managed
We aim to minimize volatility through diversification among industries. We also manage the exposure to cyclical, defensive and secular growth stocks and adjust exposure through the use of long positions, synthetic short positions and cash.
Investment Risks to Consider
These and other risks are described in the Portfolio's prospectus
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Allocation risk: The risk that the allocation of investments between growth and value companies may have a more significant effect on the Portfolio’s Net Asset Value (NAV) when one of these strategies is not performing as well as the other. In addition, the transaction costs of rebalancing the investments may, over time, be significant.
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Derivatives risk: The Portfolio may include financial derivative instruments. These may be used to obtain, increase or reduce exposure to underlying assets and may create gearing; their use may result in greater fluctuations of the net asset value.
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Emerging-markets risk: Where the Portfolio invests in emerging markets, these assets are generally smaller and more sensitive to economic and political factors, and may be less easily traded, which could cause a loss to the Portfolio.
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Equity securities risk: The value of equity investments may fluctuate in response to the activities and results of individual companies or because of market and economic conditions. These investments may decline over short- or long-term periods.
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Focused portfolio risk: Investing in a limited number of issuers, industries, sectors or countries may subject the Portfolio to greater volatility than one invested in a larger or more diverse array of securities.
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OTC derivatives counterparty risk: Transactions in over-the-counter (OTC) derivatives markets may have generally less governmental regulation and supervision than transactions entered into on organized exchanges. These will be subject to the risk that its direct counterparty will not perform its obligations and that the Portfolio will sustain losses.
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Portfolio turnover risk: A portfolio may be actively managed and turnover may, in response to market conditions, exceed 100%. A higher rate of portfolio turnover increases brokerage and other expenses. High portfolio turnover may also result in the realization of substantial net short-term capital gains, which may be taxable when distributed.
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Smaller capitalization companies risk: Investment in securities of companies with relatively small market capitalizations may be subject to more abrupt or erratic market movements because the securities are typically traded in lower volume and are subject to greater business risk.