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Large Cap Value
Vincent Costa, CFA
Head of Global Equities and Portfolio Manager
James Dorment, CFA
Kristy R. Finnegan, CFA
SummaryActively managed large cap value strategy that relies on fundamental research and analysis to capture the benefits of high-dividend yield and dividend growth.
- An investment strategy that captures the benefits of both high-dividend yield and dividend growth is the best way to outperform over various market cycles
- An experienced and specialized research team is critical to generating alpha from stock selection
- Portfolios built with active risk substantially focused on stock picking deliver a superior performance profile
ObjectiveTo outperform the Russell 1000 Value Index by 1.5-3% annualized before management fees over full market cycles with an expected annualized tracking error of 3-6%
ProcessA three-stage investment process begins with the 1,200 largest U.S. stocks. We eliminate all non-dividend payers, low dividend yielders/growers and all stocks where the dividends may be at risk, leaving a target universe with sustainable high dividend yields and dividend growth potential. The second stage seeks to identify and quantify unrecognized value in individual stocks from the target universe. A proprietary stock ranking system ("SRS") ranks each stock relative to all other stocks within its sector using multi-factor models that codify each analyst's personalized set of fundamental factors — leading to diversified and uncorrelated alpha sources. The analysts' original insights form the basis of our information advantage, thus avoiding simply "buying the consensus." Portfolio managers review and approve each investment thesis before stocks are purchased. Stage three is portfolio construction that focuses risk exposure on bottom-up stock selection, minimizing macro, sector or style impact. Our flexible dividend strategy seeks the benefits of both high dividend yield and dividend growth potential — targeting a gross yield at or above the yield of the Russell 1000 Value Index — to produce consistent returns across market cycles.
- Stock selection by career sector analysts, using sector-specific research methodologies, drives alpha
- Target universe strategically designed to identify stocks with sustainable dividend yield and dividend growth
- Flexibility to emphasize dividend growth or high current yield supports consistent returns over a variety of market cycles
- Strong performance relative to benchmark and peers since inception
Principal RisksThe principal risks are generally those attributable to investing in stocks and related derivative instruments. Holdings are subject to market, issuer and other risks, and their values may fluctuate. Market risk is the risk that securities or other instruments may decline in value due to factors affecting the securities markets or particular industries. Issuer risk is the risk that the value of a security or instrument may decline for reasons specific to the issuer, such as changes in its financial condition.
*There is no guarantee that this objective will be achieved.