The Fund is non-diversified, meaning it may concentrate its assets in fewer individual holdings than a diversified fund. Therefore, the Fund is more exposed to individual stock volatility than a diversified fund. The Fund invests in foreign securities which involves political, economic and currency risks, greater volatility, and differences in accounting methods. The Fund is exposed to the same risks that are associated with the direct ownership of real estate including, but not limited to, a general decline in the value of real estate, fluctuations in rental income, changes in interest rates, increases in property taxes, increased operating costs, overbuilding, changes in zoning laws, and changes in consumer demand for real estate.
Real Estate Fund:
Strategy
The stock prices of REITs and commercial real estate-oriented companies fluctuate
over the short term with cyclical changes in interest rates, capital market
flows and real estate markets. Healthy real estate markets, strong capital
flows and low interest rates tend to make the share prices of REITs and
commercial real estate-oriented companies rise; weak real estate markets
and capital flows, along with high interest rates tend to have the opposite
effect. Macroeconomic cycles can also affect individual sectors of the
commercial real estate market differently.
Some investors attempt to "call" these macroeconomic cycles. We at Phocas Financial
believe that this approach cannot succeed over the long term.
Long Term Focus
Our investment strategy seeks to provide strong returns over long
time periods with minimal risk, across macroeconomic cycles and commercial
real estate sectors. We focus on core positions in REIT equities, using both
qualitative and quantitative criteria to choose those companies that we feel provide
the best long-term value.
Diversification
We strive for balance through diversity in our holdings among all major
commercial real estate sectors, with an emphasis on management teams able
to create value and minimize risk.
Total Return
We believe that investing in REITs and commercial real estate-oriented
companies should be viewed as a total return strategy, in which investors
should look for a combination of both current dividend yield and long-term
capital appreciation. Thus while we do look at dividend yields, we do not
place a great deal of emphasis upon them in our stock selection process;
rather, we emphasize other factors that bear on total returns, including
growth prospects and risk parameters, as well as existing stock price
valuations relative to intrinsic values.
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