The U.S. Equity Fund may invest in any combination of U.S. common or other capital stocks, securities convertible into U.S. common or other capital stocks and U.S. fixed income securities. The Fund may also invest in derivative investments and index participation units. The Fund's holdings of large and intermediate capitalization stocks will generally approximate those of the Russell 1000 Index. The normal allocation of the portfolio is 70% large cap and 30% intermediate cap.
The manager's investment philosophy for the Fund is based on the premise that over time the real worth, or intrinsic value, of any security is defined by the present value of its future cash flow. Our research process seeks to define these future cash flows, our valuation model calculates the intrinsic value, and then we compare intrinsic value to market price. The Fund invests in securities of companies that the Manager believes are undervalued, based on fundamental research, internally developed valuation systems and seasoned investment judgment. The objective of the Fund is to exceed the return of both the Russell 1000 Index and the S&P 500 Index over moving four-year periods.
To control the level of risk in this Fund, strong fundamental research and diversification are emphasized. The Fund will typically hold between 70-90 issues. The Manager uses control ranges for maximum/minimum individual stock weights and sector weights in order to control deviations away from the benchmark Index (Russell 1000).
Since 1980, annual returns for the U.S. stock market (S&P 500 Index in $Cdn.) have varied between -23 and +39 per cent.
The Fund is suited for investors with a long-term outlook (minimum 5 to 10 years). It offers investors the ability to invest in the U.S. market. Historically, investors willing to accept the higher short-term risk in the stock market have been rewarded with higher long-term returns (compared to less risky investments).