The Multi-Manager Small Cap Fund underperformed during the quarter with a return of 11.81%, compared with the benchmark return of 12.39%. The Funds underperformance was largely due to stock selection in the consumer staples and materials sectors. Performance in the financial sector was particularly strong.
Sub-adviser performance was within expectations during the quarter. Hotchkis & Wiley was notably strong, benefiting from exceptional results in the consumer and technology areas. Following a very strong year, Riverbridge underperformed during the quarter as some of their higher-quality investments were unable to keep pace with the markets rapid move upward. During the quarter, Allianz Global Investors Capital was removed as a sub-adviser to the Fund. Summit Creek Advisors, LLC was funded as a new sub-adviser to the Fund. Summit Creek focuses on companies with consistent and sustainable revenue and earnings growth, low financial leverage, high return on equity, strong cash flow and significant management ownership.
If you're a long-term investor looking to diversify your investments by pursuing the growth potential of small-company stocks, then this Fund may be right for you. It is intended for investors who are aware that small-company stocks are generally riskier than large-company stocks due to greater volatility and less liquidity.
- Invest in small-cap stocks through a variety of external small-cap managers who have distinct investment styles and strategies.
- Select complementary managers from a broad universe of investment managers.
- Blend managers into a single fund in an effort to provide an attractive combination of risk and return.