Attractiveness Ratings for The Approved Wright Investment List

Transcription

1 Attractiveness Ratings for The Approved Wright Investment List All stocks in The Approved Wright Investment List (AWIL) universe are organized and ranked by attractiveness based on fundamental criteria. These fundamental criteria are grouped into three areas: quality, value and timing. The multi-factor model incorporates eight factors. QUALITY (two factors) Stocks are ranked on the basis of their: quality of earnings, financial strength, profitability and growth. The proprietary Wright Quality Ratings are used to develop a rating for each stock. The quality ratings are derived from 32 distinct standards. The quality of Earnings compared to Book Value is another criterion that is reviewed under this category. VALUE (three factors) Stocks are ranked on the basis of their valuations. Valuation criteria includes: price to earnings ratio, price to book ratio and free cash flow yield ratio. Stocks with low price to earnings and price to book ratios and high free cash flow yield ratios receive relatively higher ranks. TIMING (three factors) Stocks are ranked on the basis of earnings momentum and trading volume. The stocks that have positive earnings momentum and high trading volume receive relatively higher ranks. Based on the output of the multi-factor model (described above) all stocks in the AWIL universe receive a composite score of 1 to 100 (with 1 being the best). The AWIL stocks are then divided into quintiles with I being the top quintile - and most attractive and V being the bottom quintile - and least attractive. 1

2 Quantitative Ranking Model Quality Measure of Quality Proprietary Quality Rating Earnings Quality 32 specific standards in four categories including liquidity, financial strength, profitability and growth. A measure of true underlying earnings, this factor measures the excess of adjusted earnings of a company over its free cash flow adjusted by it s book value. Factor weightings are dynamic and are regularly reviewed to validate predictive strength Note: All corporate earnings data is adjusted for special charges and credits to allow for a more meaningful comparison 2

3 Quantitative Ranking Model Value Timing Measure of Profitability Measure of Value Measure of Momentum Measure of Timing Earned Return Free Cash Flow Yield Valuation- Adjusted Earned Return Earnings Momentum Trading Volume Disparity of Earnings Forecasts A measure of return on equity, this factor measures the profitability of the firm over the previous twelve months. All things equal, consistent profitability leads to higher long-term returns. A measure to gauge cash flow generation ability of a company. After all obligations are met, excess cash flow may be used to reinvest in the firm, increase shareholder value or strengthen the balance sheet. A measure to relate a company ROE to its intrinsic value. This helps assess if a company is trading at a discount or a premium relative to its profitability. A measure based on past and projected earnings. A greater emphasis is placed on prior earnings as empirical evidence suggests that past earnings are a better predictor of future earnings growth. A measure of price momentum. A greater daily trading volume over a period of time suggests continued momentum in price over the future. As a timing indicator, companies who exhibit long-term earnings growth forecasts greater than short-term earnings growth forecasts are postulated to have negative subsequent returns as long-term forecasts are likely to be downwardly revised. Factor weightings are dynamic and are regularly reviewed to validate predictive strength Note: All corporate earnings data is adjusted for special charges and credits to allow for a more meaningful comparison 3

4 Growth of $10,000 The Approved Wright Investment List (AWIL) Quintiles I & V * vs S&P 500 Index ^ 12/31/ /31/2018 $75,000 $65,000 $55,000 $45,000 $35,000 $25,000 $49,001 $42,240 $31,320 $30,982 $15,000 $5,000 12/31/0112/31/0212/31/0312/31/0412/31/0512/31/0612/31/0712/31/0812/31/0912/31/1012/31/1112/31/1212/31/1312/31/1412/31/1512/31/1612/31/1712/31/18 AWIL Quintile I - Equal Weighted AWIL Quintile V - Equal Weighted S&P Cap Weighted S&P Equal Weighted Initial hypothetical investment of $10,000 based on performance results of total investment returns of price appreciation and dividends reinvested. *The above performance results shown for the Approved Wright Investment List ( AWIL ) Quintiles I and V are hypothetical and do not represent the performance of any actual account managed by Wright Investors Service, Inc. ( Wright ). The performance results do not represent the results of actual trading using client assets and do not, and are not intended to, indicate the actual past performance or future performance of the AWIL or any account managed by Wright. It is important to note that hypothetical performance results have inherent limitations as to their use and do not take into consideration a variety of real world factors, such as trade timing and economic and market conditions, among others. The AWIL consists of securities which meet Wright s standards for investment. Such standards and requirements are available upon request. The AWIL is further separated into quintiles based on the relative Attractiveness Rating assigned to the security by Wright. Quintile 1 represents the most attractive securities within the AWIL and Quintile 5 represents the least attractive securities within the AWIL. The AWIL companies and quintiles were updated on a monthly basis. The performance results are presented without the deduction of investment advisory fees, which are specified in Wright s ADV-Part 2. Actual returns would be reduced by fees and other expenses that may be incurred by an investment account. For example, over a five-year period an annual advisory fee of 0.5% would reduce the cumulative return of a portfolio (assuming an investment return of 2.5% per quarter) from 63.86% to 59.91%. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. An investment using the AWIL may not result in returns commensurate with the above results. An investor whose assets are managed by Wright may lose all or a substantial amount of his or her investment. ^Equally weighted performance as calculated by Wright Investors Service. Source: Wright Investors Service, Inc. 4

5 Growth of $10,000 The Approved Wright Investment List (AWIL) Quintiles I & V * vs S&P 500 Index ^ 12/31/ /31/2018 $65,000 $55,000 $45,000 $35,000 $25,000 $15,000 $48062 $42,240 $30,982 $21,179 $5,000 12/31/0112/31/0212/31/0312/31/0412/31/0512/31/0612/31/0712/31/0812/31/0912/31/1012/31/1112/31/1212/31/1312/31/1412/31/1512/31/1612/31/1712/31/18 AWIL Quintile I - Cap Weighted S&P Equal Weighted AWIL Quintile V - Cap Weighted S&P Cap Weighted Initial hypothetical investment of $10,000 based on performance results of total investment returns of price appreciation and dividends reinvested. *The above performance results shown for the Approved Wright Investment List ( AWIL ) Quintiles I and V are hypothetical and do not represent the performance of any actual account managed by Wright Investors Service, Inc. ( Wright ). The performance results do not represent the results of actual trading using client assets and do not, and are not intended to, indicate the actual past performance or future performance of the AWIL or any account managed by Wright. It is important to note that hypothetical performance results have inherent limitations as to their use and do not take into consideration a variety of real world factors, such as trade timing and economic and market conditions, among others. The AWIL consists of securities which meet Wright s standards for investment. Such standards and requirements are available upon request. The AWIL is further separated into quintiles based on the relative Attractiveness Rating assigned to the security by Wright. Quintile 1 represents the most attractive securities within the AWIL and Quintile 5 represents the least attractive securities within the AWIL. The AWIL companies and quintiles were updated on a monthly basis. The performance results are presented without the deduction of investment advisory fees, which are specified in Wright s ADV-Part 2. Actual returns would be reduced by fees and other expenses that may be incurred by an investment account. For example, over a five-year period an annual advisory fee of 0.5% would reduce the cumulative return of a portfolio (assuming an investment return of 2.5% per quarter) from 63.86% to 59.91%. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. An investment using the AWIL may not result in returns commensurate with the above results. An investor whose assets are managed by Wright may lose all or a substantial amount of his or her investment. ^Equally weighted performance as calculated by Wright Investors Service. Source: Wright Investors Service, Inc. 5

6 12/31/01 12/31/02 12/31/03 12/31/04 12/31/05 12/31/06 12/31/07 12/31/08 12/31/09 12/31/10 12/31/11 12/31/12 12/31/13 12/31/14 12/31/15 12/31/16 12/31/17 12/31/ Index * of Attractiveness Ratings vs AWIL & S&P 500^ Index 12/31/2001 Through 12/31/2018 Equally Weighted Top Quintile Bottom Quintile S&P 500^ Index AWIL *The above performance results shown for the Approved Wright Investment List ( AWIL ) and Quintiles 1 and 5 of the AWIL are hypothetical and do not represent the performance of any actual account managed by Wright Investors Service, Inc. ( Wright ). ^Equally weighted performance as calculated by Wright Investors Service. The AWIL consists of securities which meet Wright s standards for investment. Such standards and requirements are available upon request. The AWIL is further separated into quintiles based on the relative Attractiveness Rating assigned to the security by Wright. Quintile 1 represents the most attractive securities within the AWIL and Quintile 5 represents the least attractive securities within the AWIL. The performance results do not represent the results of actual trading using client assets and do not, and are not intended to, indicate the actual past performance or future performance of the AWIL or any account managed by Wright. It is important to note that hypothetical performance results have inherent limitations as to their use and do not take into consideration a variety of real world factors, such as trade timing and economic and market conditions, among others. Performance results are total investment returns of price appreciation and dividends reinvested starting with a hypothetical investment of $100. The AWIL companies and quintiles were updated on a monthly basis. The performance results are presented without the deduction of investment advisory fees, which are specified in Wright s ADV-Part 2. Actual returns would be reduced by fees and other expenses that may be incurred by an investment account. For example, over a five-year period an annual advisory fee of 0.5% would reduce the cumulative return of a portfolio (assuming an investment return of 2.5% per quarter) from 63.86% to 59.91%. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. An investment using the AWIL may not result in returns commensurate with the above results. An investor whose assets are managed by Wright may lose all or a substantial amount of his or her investment. Source: Wright Investors Service, Inc. 6

7 Investment Performance Quintile Analysis AWIL Attractiveness Ratings vs The Approved Wright Investment List (AWIL) Annualized Total Returns* - Equally Weighted (12/31/2001 Through 12/31/2018) 12.0% 10.0% 9.8% 9.2% 8.0% 6.9% 6.0% 4.0% 2.0% 0.0% Top Quintile AWIL Bottom Quintile Source: Wright Investors Service *The above performance results shown for the Approved Wright Investment List ( AWIL ) and Quintiles 1 and 5 of the AWIL are hypothetical and do not represent the performance of any actual account managed by Wright Investors Service, Inc. ( Wright ). The AWIL consists of securities which meet Wright s standards for investment. Such standards and requirements are available upon request. The AWIL is further separated into quintiles based on the relative Attractiveness Rating assigned to the security by Wright. Quintile 1 represents the most attractive securities within the AWIL and Quintile 5 represents the least attractive securities within the AWIL. The performance results do not represent the results of actual trading using client assets and do not, and are not intended to, indicate the actual past performance or future performance of the AWIL or any account managed by Wright. It is important to note that hypothetical performance results have inherent limitations as to their use and do not take into consideration a variety of real world factors, such as trade timing and economic and market conditions, among others. Performance results are total investment returns of price appreciation and dividends reinvested starting with a hypothetical investment of $100. The AWIL companies and quintiles were updated on a monthly basis. The performance results are presented without the deduction of investment advisory fees, which are specified in Wright s ADV Part 2. Actual returns would be reduced by fees and other expenses that may be incurred by an investment account. For example, over a five year period an annual advisory fee of 0.5% would reduce the cumulative return of a portfolio (assuming an investment return of 2.5% per quarter) from 63.86% to 59.91%. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. An investment using the AWIL may not result in returns commensurate with the above results. An investor whose assets are managed by Wright may lose all or a substantial amount of his or her investment. 7

8 Investment Performance Quintile Analysis AWIL Attractiveness Ratings vs The Approved Wright Investment List (AWIL) Annualized Risk-Adjusted Returns* - Equally Weighted (12/31/2001 Through 12/31/2018) Top Quintile AWIL Bottom Quintile Source: Wright Investors Service *The above performance results shown for the Approved Wright Investment List ( AWIL ) and Quintiles 1 and 5 of the AWIL are hypothetical and do not represent the performance of any actual account managed by Wright Investors Service, Inc. ( Wright ). The AWIL consists of securities which meet Wright s standards for investment. Such standards and requirements are available upon request. The AWIL is further separated into quintiles based on the relative Attractiveness Rating assigned to the security by Wright. Quintile 1 represents the most attractive securities within the AWIL and Quintile 5 represents the least attractive securities within the AWIL. The performance results do not represent the results of actual trading using client assets and do not, and are not intended to, indicate the actual past performance or future performance of the AWIL or any account managed by Wright. It is important to note that hypothetical performance results have inherent limitations as to their use and do not take into consideration a variety of real world factors, such as trade timing and economic and market conditions, among others. Performance results are total investment returns of price appreciation and dividends reinvested starting with a hypothetical investment of $100. The AWIL companies and quintiles were updated on a monthly basis. The performance results are presented without the deduction of investment advisory fees, which are specified in Wright s ADV Part 2. Actual returns would be reduced by fees and other expenses that may be incurred by an investment account. For example, over a five year period an annual advisory fee of 0.5% would reduce the cumulative return of a portfolio (assuming an investment return of 2.5% per quarter) from 63.86% to 59.91%. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. An investment using the AWIL may not result in returns commensurate with the above results. An investor whose assets are managed by Wright may lose all or a substantial amount of his or her investment. 8

9 Investment Performance Quintile Analysis AWIL Attractiveness Ratings vs S&P 500 Index Annualized Total Returns* - Equally Weighted (12/31/2001 Through 12/31/2018) 12.0% 10.0% 9.8% 8.8% 8.0% 6.9% 6.0% 4.0% 2.0% 0.0% Top Quintile Source: Wright Investors Service S&P 500 Index Bottom Quintile *The above performance results shown for the Approved Wright Investment List ( AWIL ) and Quintiles 1 and 5 of the AWIL are hypothetical and do not represent the performance of any actual account managed by Wright Investors Service, Inc. ( Wright ). Equally weighted performance as calculated by Wright Investors Service. The AWIL consists of securities which meet Wright s standards for investment. Such standards and requirements are available upon request. The AWIL is further separated into quintiles based on the relative Attractiveness Rating assigned to the security by Wright. Quintile 1 represents the most attractive securities within the AWIL and Quintile 5 represents the least attractive securities within the AWIL. The performance results do not represent the results of actual trading using client assets and do not, and are not intended to, indicate the actual past performance or future performance of the AWIL or any account managed by Wright. It is important to note that hypothetical performance results have inherent limitations as to their use and do not take into consideration a variety of real world factors, such as trade timing and economic and market conditions, among others. Performance results are total investment returns of price appreciation and dividends reinvested starting with a hypothetical investment of $100. The AWIL companies and quintiles were updated on a monthly basis. The performance results are presented without the deduction of investment advisory fees, which are specified in Wright s ADV Part 2. Actual returns would be reduced by fees and other expenses that may be incurred by an investment account. For example, over a five year period an annual advisory fee of 0.5% would reduce the cumulative return of a portfolio (assuming an investment return of 2.5% per quarter) from 63.86% to 59.91%. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. An investment using the AWIL may not result in returns commensurate with the above results. An investor whose assets are managed by Wright may lose all or a substantial amount of his or her investment. 9

10 Investment Performance Quintile Analysis AWIL Attractiveness Ratings vs S&P 500 Index Annualized Risk-Adjusted Returns* - Equally Weighted (12/31/2001 Through 09/30/2018) Top Quintile S&P 500 Index Bottom Quintile Source: Wright Investors Service *The above performance results shown for the Approved Wright Investment List ( AWIL ) and Quintiles 1 and 5 of the AWIL are hypothetical and do not represent the performance of any actual account managed by Wright Investors Service, Inc. ( Wright ). Equally weighted performance as calculated by Wright Investors Service. The AWIL consists of securities which meet Wright s standards for investment. Such standards and requirements are available upon request. The AWIL is further separated into quintiles based on the relative Attractiveness Rating assigned to the security by Wright. Quintile 1 represents the most attractive securities within the AWIL and Quintile 5 represents the least attractive securities within the AWIL. The performance results do not represent the results of actual trading using client assets and do not, and are not intended to, indicate the actual past performance or future performance of the AWIL or any account managed by Wright. It is important to note that hypothetical performance results have inherent limitations as to their use and do not take into consideration a variety of real world factors, such as trade timing and economic and market conditions, among others. Performance results are total investment returns of price appreciation and dividends reinvested starting with a hypothetical investment of $100. The AWIL companies and quintiles were updated on a monthly basis. The performance results are presented without the deduction of investment advisory fees, which are specified in Wright s ADV Part 2. Actual returns would be reduced by fees and other expenses that may be incurred by an investment account. For example, over a five year period an annual advisory fee of 0.5% would reduce the cumulative return of a portfolio (assuming an investment return of 2.5% per quarter) from 63.86% to 59.91%. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. An investment using the AWIL may not result in returns commensurate with the above results. An investor whose assets are managed by Wright may lose all or a substantial amount of his or her investment. 10