AMG Funds. AMG Trilogy International Small Cap Fund (TLSIX) June 2015

Transcription

1 AMG Funds AMG Trilogy International Small Cap Fund (TLSIX) June 2015

2 AMG Funds Overview XXAMG Funds is a wholly owned subsidiary and the U.S. retail distribution arm of Affiliated Managers Group, Inc. (AMG) Assets Under Management $48.0 Billion AMG is a global asset management company with investments in leading boutique investment management firms Subadvised Assets Under Assets Service $10.1 Billion $6.7 Billion Assets Under Service $8.4 Billion Assets Under Management $8.0 Billion XXAMG Funds provides access to many of AMG s boutique investment Affiliates through our family of mutual funds, separately managed accounts, alternative funds and asset-allocation products In addition, we oversee and distribute a number of complementary mutual funds subadvised by unaffiliated investment managers About AMG Funds 1 ffsubsidiary of Affiliated Managers Group, Inc. (AMG) f f$48.0 billion under management Includes $12.3 billion of Aston Asset Management s mutual funds and separately managed accounts f f$8.4 billion under service Includes $1.4 billion of Aston Asset Mangement s separately managed accounts f f$10.1 billion subadvised assets ff153 employees Includes 38 Aston Asset Management Employees 1 As of June 30,

3 AMG Trilogy International Small Cap Fund Overview XXFund Subadvisor: Trilogy Global Advisors, LP XXFund AUM: $23.5 million 1 XXFund seeks long-term capital appreciation XXFund generally invests at least 80% of its net assets in common and preferred stocks of small-cap companies and at least 40% of its assets in the stocks of companies located outside of the United States Portfolio will normally allocate its investments across different countries and regions to total approximately 40 to 100 securities To gain exposure to foreign investments, the Fund may also invest in ADRs (American Depositary Receipts), GDRs (Global Depositary Receipts) and other depositary receipts of non-u.s. issuers Share Class Ticker Inception Expense Ratio Gross/Net 2 Minimum Investment Maximum Sales Load 12b 1 Fees Investor Class TLSVX 07/15/ %/1.60% $2,000 ($1,000 IRA) 0.25% Service Class TLSSX 03/01/ %/1.21% $100,000 ($25,000 IRA) 1 As of June 30, 2015 Institutional Class TLSIX 03/01/ %/1.10% $1,000,000 ($50,000 IRA) 2 The Fund s Investment Manager has contractually agreed, through at least March 1, 2016, to limit Fund operating expenses. The net expense ratio reflects this limitation, while the gross expense ratio does not. Please refer to the Fund s Prospectus for additional information on the Fund s expenses. 2

4 Trilogy Global Advisors, LP Overview X XFounded in 1999 AMG Affiliate since 2010 XXInvestment strategies span the globe, from emerging to developed markets, and all market capitalizations XXTrilogy s disciplined team-based investment process is applied to all strategies Centers around an experienced team of global sector analysts who conduct sector-based original research across all markets and capitalization ranges Utilizes an evolving view of global macro risk to identify potential event risk that can impact an individual stock or sector Analysts produce three forecasts for each investment candidate (base, pessimistic and optimistic) to seek to identify the best risk/reward opportunities Risk controls are focused on avoiding losing money, rather than minimizing tracking error XXTrilogy manages over $11.7 billion in global assets 1 1 As of June 30,

5 What This Fund Will Provide Investors XXAccess to a highly respected, global growth investment boutique with a unique investment process X XExposure to an under-allocated asset class that offers solid alpha potential XXAdditional equity diversification through exposure to non-u.s. small-cap companies X XPotential capital appreciation Diversification does not guarantee a profit or protect against a loss in declining markets. 4

6 Investment Philosophy Trilogy s investment approach is based on the philosophy that: XXEarnings growth drives equity returns over the long term XXIdentifying both early stage and traditional growth companies provides the best investment results XXRisk control should be focused on avoiding losing money, rather than minimizing tracking error XXA disciplined process requires consistently identifying opportunities, evaluating potential returns and responding with timely buy/sell decisions 5

7 Investment Process X XTrilogy employs a bottom-up, growth-at-a-reasonable price, fundamental investment approach. The core of Trilogy s investment process is its global research focus, which allows sector analysts to: Research companies across all countries and cover the full capitalization spectrum Assess the results of the quantitative and qualitative screening to identify stocks that merit further in-depth and original research Model companies under three scenarios (base, pessimistic and optimistic), incorporating the firm s global risk analysis and establishing price targets Develop sector buy lists X X Portfolio Managers then select best risk/reward opportunities from sector buy list Sector and country weights are driven by investment opportunity Countries and sectors with the most attractive risk/reward opportunities represent the largest weight in the Fund 6

8 Investment Process (continued) NARROW THE UNIVERSE 20, Companies Market cap $300 million Debt/Total Capital Ratio 60% QUANTITATIVE & QUALITATIVE SCREENS Scoring and ranking based on sector, except High Cash Flow, which is done by country PROVEN GROWTH METRICS High ROE High Earnings Growth Consistent Earnings Growth POTENTIAL GROWTH METRICS High Cash Flow Accounting Quality Earnings Improvement Potential Analysts may also recommend companies for inclusion based on research DEVELOP SECTOR BUY LISTS Research team conducts fundamental due diligence ANALYSTS MODEL COMPANIES UNDER 3 SCENARIOS Base Case Pessimistic Case Optimistic Case Price targets established for each scenario Oversight of economic assumptions in analyst modeling PORTFOLIO CONSTRUCTION Individual position sizes determined by upside return vs. downside risk Sector/country weights driven by the number of ideas on each sector buy list Integrate global risk analysis There is no guarantee that these investment strategies will work under all market conditions, and each investor should evaluate his or her ability to invest for the long term, especially during periods of downturns in the market. PORTFOLIO Generally securities Positions typically range between 1% - 3% Broad historical diversification by sector and country 7

9 Investment Process (continued) Trilogy s portfolio construction guidelines include: XXRegion and sector ranges (MSCI AC World ex-usa Small Cap Index) Benchmark Weight 10% < 10% Portfolio Weight maximum 2X benchmark minimum 20% of the portfolio XXMaximum individual stock position = 5% XXVariation from country/sector ranges due to market conditions is allowed and reviewed by the portfolio management team Trilogy sells/trims stock positions based on target prices XXTarget price is achieved XXA more compelling idea is identified XXFundamentals deteriorate XXA high standard deviation risk event becomes a concern 8

10 Benefits of Investing in International Small Cap International small-cap stocks can provide a meaningful enhancement to an already diversified global equity portfolio. An allocation to international small-cap stocks offer: XXOpportunity for attractive risk-adjusted returns X XExposure to faster growth outside the U.S. X XPotentially enhanced diversification X XConsiderable alpha potential for active managers to capture XXCharacteristics similar to domestic small-cap stocks 9

11 Conclusion X XTrilogy s investment strategies span the globe, from emerging to developed markets, and all market capitalizations XXTrilogy s disciplined, team-based investment process is applied to all strategies X XTrilogy manages over $11.7 billion in global assets 1 XThe X AMG Trilogy International Small Cap Fund (TLSIX) provides investors with: Access to a highly respected, global growth investment boutique with a unique investment process Exposure to an under-allocated asset class that offers solid alpha potential Additional equity diversification through exposure to non-u.s. small-cap companies Potential capital appreciation 1 As of June 30,

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13 Portfolio Manager Biographies William Sterling, Chief Executive Officer, Chairman, Chief Investment Officer and Senior Portfolio Manager Mr. Sterling has guided Trilogy since he founded the firm in Under his direction and portfolio management discipline, Trilogy has managed global, international and emerging markets mandates. Mr. Sterling launched Trilogy after leaving Credit Suisse Asset Management, where he was an Executive Director and Global Head of Equities. He was a Managing Director and Head of International Equities at BEA Associates before the firm was acquired by CSAM. Previously, Mr. Sterling was Head of Economic Research in Tokyo and later Chief International Economist at Merrill Lynch. He has a Ph.D. in Economics from Harvard University and studied at the University of Tokyo in the early 1980s as a Fulbright scholar. He is fluent in Japanese. Gregory J. Gigliotti, Managing Director and Senior Portfolio Manager Mr. Gigliotti joined Trilogy Global Advisors after having been Vice President and Senior Portfolio Manager at Goldman Sachs Asset Management, where he co-managed a $7 billion series of mutual funds and institutional accounts. Mr. Gigliotti also worked at Franklin Mutual Advisors (formerly the Mutual Series Funds) as a Vice President and Senior Analyst and was member of the investment team led by Michael Price. He has a B.A. in Economics and International Relations from Connecticut College. Pablo Salas, Managing Director and Senior Portfolio Manager Mr. Salas is responsible for the management of Trilogy s Emerging Market Equity portfolios. Mr. Salas joined Trilogy in 2005, the result of a merger with BPI Global Asset Management, LLP, where he was co-founder. Prior to BPI, Mr. Salas was Director and Senior Portfolio Manager in the International Portfolio Management and Research area at STI Capital Management/SunTrust, Inc., where he launched the Emerging Markets Portfolio. Previously, he was a Portfolio Manager in the International Equities area at Lazard Freres Asset Management where he launched an Emerging Markets Portfolio. Mr. Salas also held positions at the Principal Financial Group/Invista Capital Management and NationsBank. He earned a B.S. in Business Administration and majored in Marketing from Indiana University and earned a M.B.A from the University of Wisconsin. 12

14 Portfolio Manager Biographies (continued) Jessica Reuss, Portfolio Specialist, Research Analyst and Portfolio Manager Ms. Reuss is responsible for the global research coverage in the Consumer Discretionary and Consumer Staples sectors. Ms. Reuss joined from Kornitzer Capital Management where she was an Equity Analyst for Private Advisory Services. Previously, she was Senior Vice President for Bank of America s Private Bank. She also worked at SunTrust Private Client Services as a Portfolio Manager and at Kirkpatrick Pettis as an Equity Research Analyst. Ms. Reuss earned her M.S. in Accounting and Information Systems and her B.S. in Business Administration and Accounting from the University of Kansas. She is a CFA charterholder. David Runkle, Director of Quantitative Research and Portfolio Manager David serves as the Director of Quantitative Research. David joined from Piper Jaffray where he was an Investment Research Manager. David has been an award-winning professor in finance, accounting, and economics at Brown University and the University of Minnesota where he has taught since 1989, and has served as a Research Officer at the Minneapolis Fed. In addition to holding a Ph.D. in economics from M.I.T., David has earned CPA and CFA credentials and has served on the CFA Institute s Curriculum Committee and Corporate Disclosure Policy Committee. He currently serves on the Financial Accounting Standards Advisory Council, which provides advice to the Financial Accounting Standards Board (FASB). 13

15 Disclosures Investors should carefully consider the Fund s investment objectives, risks, charges and expenses before investing. For this and other information, please call or visit for a free prospectus. Read it carefully before investing or sending money. The Fund is subject to the risks associated with investments in emerging markets, such as erratic earnings patterns, economic and political instability, changing exchange controls, limitations on repatriation of foreign capital and changes in local governmental attitudes toward private investment, possibly leading to nationalization or confiscation of investor assets. Investments in foreign securities, even though publicly traded in the United States, may involve risks, which are in addition to those inherent in domestic investments. The Fund is subject to currency risk resulting from fluctuations in exchange rates that may affect the total loss or gain on a non-u.s. Dollar security when converted back to U.S. Dollars. The Fund is subject to risks associated with investments in small-capitalization companies, such as erratic earnings patterns, competitive conditions, limited earnings history and a reliance on one or a limited number of products. The Fund may invest in derivatives such as options and futures; the complexity and rapidly changing structure of derivatives markets may increase the possibility of market losses. A short-term redemption fee of 2% will be charged on redemptions of Fund shares within 60 days of purchase. Funds are distributed by AMG Distributors, Inc., a member of FINRA/SIPC. For more information, call