Large-cap equities: The case for a defensive approach

Stretched valuations. Weak earnings growth. Range-bound markets.

Listen as Portfolio Manager Ty Nutt explains why these and other factors are leading his team to emphasize quality and remain defensive.

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The views expressed represent the Manager’s assessment of the market environment as of August 2013, and should not be considered a recommendation to buy, hold, or sell any security, and should not be relied on as research or investment advice.

Carefully consider the Funds' investment objectives, risk factors, charges, and expenses before investing. This and other information can be found in the Funds' prospectuses and summary prospectuses, which may be obtained by visiting or calling 877 693-3546. Investors should read the prospectus and the summary prospectus carefully before investing.

Past performance does not guarantee future results.

Investing involves risk, including the possible loss of principal.

Risk is increased in a concentrated portfolio since it holds a limited number of securities with each investment having a greater effect on the overall performance.

Value investing focuses on buying stocks that are trading at bargain prices based on fundamental analysis, then holding them until they become fully valued. Typically, value investors select securities with lower-than-average price-to-book or price-to-earnings ratios and/or high dividend yields.

Quantitative easing is a government monetary policy used to increase the money supply by buying government securities or other securities from the market. Quantitative easing increased the money supply by flooding financial institutions with capital in an effort to promote increased lending and liquidity.

Gross domestic product is a measure of all goods and services produced by a nation in a year.

S&P 500 companies are those 500 mostly large-cap stocks weighted by market value that make up the S&P 500 Index. The S&P 500 Index is often used to represent performance of the U.S. stock market.

The price-to-earnings ratio (P/E ratio) is a valuation ratio of a company’s current share price compared to its earnings per share. Generally, a high P/E ratio means that investors are anticipating higher growth in the future.

The price-to-book ratio (P/B ratio) compares a stock’s market value to its book value.

Operating cash flow (OCF) is a measure of the amount of cash generated by a company's normal business operations. OCF is important because it indicates whether a company is able to generate sufficient positive cash flow to maintain and grow its operations, or whether it may require external financing. OCF is calculated by adjusting net income for items such as depreciation, changes to accounts receivable and changes in inventory.

Dividend yield is a financial ratio that shows how much a company pays out in dividends each year relative to its share price. Of course, there is no guarantee that dividend-paying stocks will continue to pay dividends.

An exchange-traded fund (ETF) is a security that represents all the stocks on a given exchange. ETF shares can be bought, sold, short-sold, traded on margin, and generally function as if they were stocks.

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