Why choose this strategy?
- To pursue potentially strong risk-adjusted returns from a research-driven value strategy
- To gain exposure to undervalued mid- and small-cap companies
Investment strategy
- Vaughan Nelson seeks to take advantage of temporary information and marketplace inefficiencies in the small to mid-cap universe to find opportunities to invest in companies at valuations materially below their long-term intrinsic value
- Managers follow a research-intensive process emphasizing balance sheets and cash flow-based projections
- The team defines value in three ways and seeks to diversify across company types:
Undervalued Growth
- Earning positive return on capital
- Stable-to-improving returns
- Not paying for future growth
Undervalued Assets
- Priced at a discount to asset value
- Identifiable catalyst with ability to close valuation gap
Undervalued Dividend
- High, secure dividend
- Minimal perceived downside risk
