NorthCoast Investment Advisory Team

Transcription

1 NorthCoast Investment Advisory Team

2 NORTHCOAST ASSET MANAGEMENT An established leader in the field of tactical investment management, specializing in quantitative research and constructing institutional-caliber portfolios designed for the individual investor. E XPERIENCE. Founded in 1988 $2.6 billion in AUM (as per March 2016 ADV) S TABILITY. Proprietary, quantitative, and tactical investment strategies Legacy of preserving capital during the bear markets of and 2008 P ERFORMANCE. Long-term portfolio performance Exclusive Agreement with Investor s Business Daily ETF Partnership with BlackRock ishares Recognized as a Financial Times Top 300 Registered Investment Adviser (2014, 2015)

3 Individual Equity Strategies ETF Strategies Liquid Alternative Strategies CAN SLIM Tactical All-Cap Growth Tactical Income Tactical Growth Tactical Yield- Production Tactical Global Asset Allocation Zero Beta Liquid Alternative Investments Legends Value Vista All-Cap Value (Fully Invested) All-Cap Growth (Fully Invested) U.S. Sector Select Hedged Tactical U.S. Sector Allocation Aggressive Income Aggressive Yield- Production You may consider these portfolios if you seek: You may consider these portfolios if you seek: You may consider these portfolios if you seek: Individual equity solutions designed to generate alpha Active risk-management with concentrated positions A unique complement to an existing portfolio A tactical approach that can move to 100% cash (CAN SLIM strategies only) Diversified exposure to multiple asset classes Active risk-management A comprehensive low-cost investment solution Portfolio designed for retirement Performance returns that are typically not correlated to nor dependent on the returns of general equity and bond market 3

4 TODAY S Few traditional investment options meet the inflation hurdle Non-traditional yield categories include international bonds, high dividend equities, REITS, and alternative income Combining traditional and non-traditional yieldgenerating investment can improve a portfolio s yield with an acceptable level of volatility Inflation = 3% Source: Bloomberg, ishares, as of 9/26/2012 4

5 3 Step Systematic Investment Process Determine optimal asset allocation Screen for best risk-adjusted return potential within each asset class Apply risk management controls 1. Market Environment Analysis 2. Security Selection 3. Risk Management Technical Indicators Technical Signals Volatility Macro Economic Environment Macro Economic Metrics Drawdown Market Sentiment Asset Class Sentiment Correlation Valuation Valuation Metrics Asset Class membership Portfolio 5

6 INVESTMENT PROCESS Seeks a target yield of inflation +2-3% Protection against rising interest rates & inflation Downside protection through tactical allocation to yield sources with diversification benefits Potential for appreciation through growth assets Building on the multi-decade experience of Tactical Asset Management techniques, NorthCoast has applied its knowledge to the Tactical Income ETF product The Market Risk Meter identifies the risk environment through analysis of technical, macroeconomic, sentiment, and valuation indicators, then adapts the level of risk within the portfolio by shifting capital to different asset classes Equities Alternative Corporate Debt Sovereign Debt Bullish Opportunistic Moderate At its most aggressive, the portfolio will be allocated across equity and highyielding assets; at its most conservative, the portfolio will hold cash equivalents, Conservative Risk-Averse Daily review by Investment Committee The allocation above is shown for informational purposes only. It is not a recommendation to buy or sell any of these asset classes. 6

7 DYNAMIC ASSET ALLOCATION 11/1/2012 3/31/2016. The allocation above is shown for informational purposes only. It is not a recommendation to buy or sell any of these asset classes. 7

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9 Tactical Income is a methodical alternative to passive buy and hold strategies. Consider the following benefits for your investment: Accessible Complementary Defensive 0.65% management fee with a $100,000 account minimum Low correlation to typical benchmarks making it an appealing complement to a strategic or asset allocation portfolio Protection against rising interest rates and downside risk Disciplined Quantitatively researched and rules-based management Transparent 24/7 online access. Experienced advisory team readily available to provide portfolio insight and analysis 9

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11 DEFINITION OF STATISTICAL TERMS Beta: A measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole. You can think of beta as the tendency of a security's returns to respond to swings in the market. A beta of 1 indicates that the security's price will move with the market. A beta of less than 1 means that the security will be less volatile than the market. A beta of greater than 1 indicates that the security's price will be more volatile than the market. For example, if a stock s beta is 1.2, it's theoretically 20% more volatile than the market. Alpha: A measure of performance on a risk-adjusted basis. Alpha takes the volatility (price risk) of a security and compares its riskadjusted performance to a benchmark index. The excess return of the security relative to the return of the benchmark index is a security's alpha. A positive alpha of 1.0 means the fund has outperformed its benchmark index by 1%. Correspondingly, a similar negative alpha would indicate an underperformance of 1%. R-squared: A statistical measure that represents the percentage of a security's movements that can be explained by movements in a benchmark index. For fixed-income securities, the benchmark is the T-bill. For equities, the benchmark is the S&P 500. R-squared values range from 0 to 100. An R-squared of 100 means that all movements of a security are completely explained by movements in the index. A high R-squared (between 85 and 100) indicates the portfolio s performance patterns have been in line with the index. A portfolio with a low R-squared (70 or less) doesn't act much like the index. Standard Deviation: A measure of the dispersion of a set of data from its mean. The more spread apart the data, the higher the deviation. Standard deviation is applied to the annual rate of return of an investment to measure the investment's volatility. Standard deviation is also known as historical volatility and is used by investors as a gauge for the amount of expected volatility. Sharpe Ratio: A ratio developed by Nobel laureate William F. Sharpe to measure risk-adjusted performance. The Sharpe ratio is calculated by subtracting the risk-free rate - such as that of the 10-year U.S. Treasury bond - from the rate of return for a portfolio and dividing the result by the standard deviation of the portfolio returns. The Sharpe ratio formula is: The Sharpe ratio tells us whether a portfolio's returns are due to smart investment decisions or a result of excess risk. This measurement is very useful because although one portfolio or fund can reap higher returns than its peers, it is only a good investment if those higher returns do not come with too much additional risk. The greater a portfolio's Sharpe ratio, the better its risk-adjusted performance has been. A negative Sharpe ratio indicates that a risk-less asset would perform better than the security being analyzed. 11

12 DEFINITION OF STATISTICAL TERMS Up-Market Capture Ratio (Up Capture): A statistical measure of an investment manager's overall performance in up-markets. The up-market capture ratio is used to evaluate how well an investment manager performed relative to an index during periods when that index has risen. The ratio is calculated by dividing the manager's returns by the returns of the index during the up-market, and multiplying that factor by 100. Down-Market Capture Ratio (Down Capture): A statistical measure of an investment manager's overall performance in downmarkets. The down-market capture ratio is used to evaluate how well or poorly an investment manager performed relative to an index during periods when that index has dropped. The ratio is calculated by dividing the manager's returns by the returns of the index during the down-market and multiplying that factor by 100. Correlation: Correlation is computed into what is known as the correlation coefficient, which ranges between -1 and +1. Perfect positive correlation (a correlation co-efficient of +1) implies that as one security moves, either up or down, the other security will move in lockstep, in the same direction. Alternatively, perfect negative correlation means that if one security moves in either direction the security that is perfectly negatively correlated will move in the opposite direction. If the correlation is 0, the movements of the securities are said to have no correlation; they are completely random. Drawdown (Max Drawdown): The peak-to-trough decline during a specific record period of an investment. A drawdown is usually quoted as the percentage between the peak and the trough. For our purposes, the max drawdown refers to the maximum peak to trough decline between January 1, 2001 and the present time. * Source: Investopedia.com 12

13 DISCLOSURE INFORMATION This information contained herein has been prepared by NorthCoast Asset Management, LLC ("NorthCoast") on the basis of publicly available information, internally developed data and other third party sources believed to be reliable. NorthCoast has not sought to independently verify information obtained from public and third party sources and makes no representations or warranties as to accuracy, completeness or reliability of such information. All opinions and views constitute judgments as of the date of writing without regard to the date on which the reader may receive or access the information, and are subject to change at any time without notice and with no obligation to update. This material is for informational and illustrative purposes only and is intended solely for the information of those to whom it is distributed by NorthCoast. No part of this material may be reproduced or retransmitted in any manner without the prior written permission of NorthCoast. NorthCoast does not represent, warrant or guarantee that this information is suitable for any investment purpose and it should not be used as a basis for investment decisions. PAST DOES NOT GUARANTEE OR INDICATE FUTURE RESULTS. This material should not be viewed as a current or past recommendation or a solicitation of an offer to buy or sell any securities or investment products or to adopt any investment strategy. The reader should not assume that any investments in companies, securities, sectors, strategies and/or markets identified or described herein were or will be profitable and no representation is made that any investor will or is likely to achieve results comparable to those shown or will make any profit or will be able to avoid incurring substantial losses. Performance differences for certain investors may occur due to various factors, including timing of investment. Investment return will fluctuate and may be volatile, especially over short time horizons. INVESTING ENTAILS RISKS, INCLUDING POSSIBLE LOSS OF SOME OR ALL OF THE INVESTOR'S PRINCIPAL. The investment views and market opinions/analyses expressed herein may not reflect those of NorthCoast as a whole and different views may be expressed based on different investment styles, objectives, views or philosophies. To the extent that these materials contain statements about the future, such statements are forward looking and subject to a number of risks and uncertainties. 13