Long-term growth of capital.
The Fund seeks to achieve its investment objective by investing at least 80% of its net assets under normal circumstances in common and preferred stocks and other types of equity securities.
The Fund invests primarily (meaning at least 65%) in companies in both developed and emerging market countries outside the United States. An issuer is considered to be located outside the United States if at least 50% of its revenues or profits are from business activities located outside the U.S., or at least 50% of its assets are located outside the U.S., or the principal trading market for its securities is located outside the U.S. The portfolio managers focus on companies whose security prices do not fully reflect their potential for growth. Under normal circumstances, the Fund’s assets are invested in foreign (non-U.S.) securities of companies representing at least three different countries. Stock selection is key to the performance of the Fund.
The portfolio managers seek to identify securities of companies with characteristics such as:
- Low valuation relative to their long term cash earnings potential
- Potential for significant improvement in the company’s business
- Financial strength (favorable debt ratios and other financial characteristics)
- Sufficient liquidity
The Fund also may invest to a lesser extent in debt securities and may invest in securities of companies located in the United States. The portfolio managers may use various investment techniques (which may involve the use of derivative instruments such as swaps, options, futures and options on futures) to adjust the Fund’s investment exposure, but there is no guarantee that these techniques will work.
We believe that stocks are not fairly valued at all times and that certain stocks whose price to cash earnings ratios are low relative to their long term growth rates have the potential to produce superior investment returns.
The investment decision-making process is a disciplined, research driven, bottom-up process, which leverages the network of GE resources. Our investment process begins by screening the universe of non-U.S. developed and emerging markets companies with market capitalizations greater than $2 billion. We conduct quantitative analysis focused on Price/Cash Earnings Ratios, Cash Earnings Growth, and Yield. Detailed, fundamental company analysis, industry competitive analysis, and a macro-environment review further narrow the list of buy candidates. Our analysts then seek a catalyst for change in each stock that will unlock the future potential of the company. The final portfolio construction is driven by our level of conviction in each stock based on thorough discussions among the portfolio managers and an overall risk assessment.
1 The investment process is fluid and may change from time to time without prior public notice as market conditions and portfolio managers change.
