July 2009
Ken Mahoney’s Q&A with Jim Schier, CFA Portfolio Manager, RydexSGI Mid Cap Value Fund
Ken: Why do you like Mid Cap Value versus other asset classes?
Jim: Value stocks are low expectation stocks that offer better downside risk protection. Mid-caps are generally representative of companies that are large enough to have some scale and competitive advantage yet small enough to have above average growth opportunities.
Ken: What are some opportunities that you are looking at?
Jim: While we do not comment on companies that we are currently researching or working a ticket for, recent additions have been select electric utilities that are priced at a discount to peers and have above average growth via investments in higher return Federal Energy Regulatory Commission (FERC) regulated interstate transmission projects that tie wind farms to an interstate grid. We've also
Ken: How do you pick stocks for the portfolio?
Jim: The ideal stock is priced at a discount to the market and lower than usual versus its peers or has a history of being inexpensively priced for transitory and correctable reasons. The company also would have sufficient competitive stature to have strategic attraction and staying power in their industry. The company would have the ability to earn higher return on capital in the future.
Ken: Is there an area that you are over weighing or under weighing? And why?
Jim: Historically, we have had difficulty finding companies that appear to offer the ability to earn higher return on capital in financial and consumer discretionary. Therefore, we are underweight in those sectors.
Investors should consider the investment objectives, risks, and charges and expenses of the mutual funds available under the RydexSGI Funds carefully before investing. You may obtain a prospectus that contains this and other information about the mutual funds by calling 800.820.0888. You should read the prospectus carefully before investing. Investing in mutual funds involves risk and there is no guarantee of investment results.
The opinions expressed are those of Jim Schier, not those of RydexSGI or its affiliates. This information is subject to change at any time, based on market and other conditions and should not be construed as a recommendation of any specific security or strategy.
Investments in small and/or mid-sized company securities may present additional risks such as less predictable earnings, higher volatility and less liquidity than larger, more established companies.
Rydex Distributors, Inc. distributes the Rydex funds, which are managed by Rydex Investments, and Security Distributors, Inc. distributes the Security funds, which are managed by Security Global Investors. Rydex Investments, Security Global Investors, Rydex Distributors, Inc., and Security Distributors, Inc. are subsidiaries of Security Benefit Corporation (Security Benefit). Security Global Investors (Security Global Investors, LLC and Security Investors, LLC) and Rydex Investments (PADCO Advisors, Inc. and PADCO Advisors II, Inc.) make up the investment advisory arm of Security Benefit.
The funds are distributed by Rydex Distributors, Inc. (RDI). Security Global InvestorsSM is the investment advisory arm of Security Benefit Corporation (Security Benefit). Security Global Investors consists of Security Global Investors, LLC, Security Investors, LLC and Rydex Investments. Rydex Investments is the primary business name for PADCO Advisors, Inc. and PADCO Advisors II, Inc. SGI and RDI are both affiliates and are subsidiaries of Security Benefit.
This newsletter and its contents is neither a solicitation nor an offer to buy/sell any financial product(s). Information about financial product(s) provided herein may not be suitable for all investors. Moreover, the information contained herein has been obtained from sources believed to be reliable; its accuracy and completeness cannot be guaranteed.
