Embark Small Cap Equity Fund Institutional Class (ESCWX)

Overview

Investing in small-cap companies can offer investors significant growth potential, and specialized funds that focus on this segment are an important tool for achieving diversified exposure. A small-cap company fund typically targets businesses with a smaller market capitalization, often defined by the fund's specific criteria but generally perceived as companies at the lower end of the market capitalization spectrum. These funds aim to capitalize on the agility and the potential higher growth rates of small-cap companies compared to larger, more established firms. Investments in equity securities, including common stocks of both U.S. and non-U.S. issuers, form the core of the fund's strategy, with a primary emphasis on U.S. companies. Recognizing the inherent risk and volatility of small-cap investing, these funds often employ strategies that include borrowing for investment purposes, aiming to maximize returns while managing the investment risks associated with small-cap market segments.

Products and Services

• Equity Securities Investment:

At its core, the fund specializes in investing in equity securities of small-cap companies, across a diverse range of industries and geographical locations. Equity securities encompass various forms of ownership in companies, including but not limited to common stocks, preferred stocks, or other securities convertible into common stock. This wide-ranging definition allows the fund to leverage different equity products to optimize returns for investors. By focusing at least 80% of its net assets, plus any borrowings for investment purposes, on equity securities, the fund demonstrates a clear strategic direction towards small-cap market segments.

• Common Stocks of U.S. Issuers:

While the fund maintains a broad mandate to invest in equity securities issued by both U.S. and non-U.S. companies, it primarily concentrates on common stocks of U.S. issuers. Common stocks represent shares of ownership in a company and come with voting rights, potentially offering dividends to shareholders. The emphasis on U.S. stocks is due to the relative stability, regulatory environment, and growth opportunities within the U.S. market. This strategy aims to harness the potential for high returns while managing the risks associated with small-cap investments.

• Borrowings for Investment Purposes:

An innovative aspect of the fund's strategy includes the use of borrowings to enhance investment capabilities. By borrowing additional funds for investment purposes, the fund attempts to amplify its investment capacity beyond its net assets. This leverage can potentially increase returns on equity but also comes with higher risk. This approach is carefully managed to align with the fund's overall risk tolerance and investment objectives, aiming to achieve a balanced portfolio with the potential for significant growth.