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18.23. Value Stock Risk

The Manager may be wrong in its assessment of a company’s value and the stocks the Investment Compartment owns may not reach what the Manager believes. A particular risk of the Investment Compartment’s value is that some holdings may not recover and provide the capital growth anticipated or a stock judged to be undervalued may actually be appropriately priced. Further, because the prices of value-oriented securities tend to correlate more closely with economic cycles than growth-oriented securities, they generally are more sensitive to changing economic conditions, such as changes in interest rates, corporate earnings, and industrial production. The market may not favor value-oriented stocks and may not favor equities at all. During those periods, the Investment Compartment’s relative performance may suffer.