Black Forest Capital - Fund I

**Investment Objective** This wikifolio seeks to capture the size and value factor premia empirically identified by Nobel laureates Eugene Fama and Kenneth French. The strategy focuses on investing in companies that meet size and value criteria, demonstrate a sustainable business model, and are led by competent management teams. **Theoretical Foundation** In 1992, Eugene Fama and Kenneth French introduced the three-factor model, which augments the market risk factor with size and value factors. The size effect posits that stocks with lower market capitalizations historically deliver higher returns compared to their large-cap counterparts. The value effect suggests that stocks trading at low valuations tend to outperform those with high valuations over the long term. **Market Context & Opportunity** While the size and value factors have underperformed the broader market in recent years, this period of relative weakness increases the likelihood of mean reversion. The strategy maintains a global investment universe to capitalize on these opportunities. The portfolio is structured with a long-term perspective, targeting an investment horizon of 5 to 10 years.