DIVIDEND GROWTH PORTFOLIO

Transcription

1 DIVIDEND GROWTH PORTFOLIO NEIL MITCHELL TEAM AT MORGAN STANLEY PWM 2014 THIRD QTR

2 EXECUTIVE SUMMARY Investment Objective Deliver market-like returns with above market yields and less risk Suitable for long-term investors looking for a growth and income equity portfolio Description The Dividend Growth Portfolio is a diversified portfolio of dividend paying global equities These core holdings are combined with opportunistic investments Companies with an event-driven component Clear catalysts 2

3 INVESTMENT PROCESS Thought Leadership + Collaboration Performance Wall Street We have relationships throughout Wall Street because of our experience and history in the business Buy Side Relationships In communication and meet regularly with top Hedge Fund and Long Only Managers Morgan Stanley Research Access to industry leading research department to source ideas and confirm investment theses Idea Generation High Net Worth Clients Our clients are leaders in various sectors of the economy, gives us a good feel for business sentiment and macroeconomic trends We are able to crosscheck between all of these relationships and thoroughly research each investment 3

4 INVESTMENT PROCESS Portfolio Construction 75 to 90% of the Portfolio Great businesses with strong dividends and prospects for growth 10 to 25% of the Portfolio Opportunistic Ideas We seek to achieve outsized returns and move the needle with these investments Allows us to hold excess cash which provides a buffer during market corrections and is dry powder when we are ready to invest during market turmoil 4

5 INVESTMENT PROCESS Opportunistic Ideas Dislocations in Market Pricing Misunderstood Companies Corporate Change (spin-offs, mergers, CEO change) Under-the-radar Companies 5

6 INVESTMENT PROCESS Sources of Returns Security Selection Key aspect, particularly for opportunistic investments Sector Allocation Diversify into all market areas Concentration/Diversification Balance is key Market Timing Not good at, very unreliable Leverage Adds risk 6

7 RISK MANAGEMENT How do we manage risk? No position is greater than 7% of the portfolio at cost No position allowed to be greater than 15% of the portfolio at market value No leverage Portfolio is diversified, we aim to avoid the risks associated with high concentration Typically hold between 20 and 25 positions Always hold cash as a buffer for volatility Expect the portfolio to generally hold at least 10% cash Allows us to re-invest after market sell-offs and corrections 7

8 PORTFOLIO STATISTICS Dividend Growth Portfolio S&P 500 Price/Earnings Ratio Dividend Yield 3.2% 1.98% Historic Standard Deviation 7.5% 9.3% Sector Allocation Cons Discretionary 6% 7% 6% 6% 13% 13% 10% 3% 3% 9% 6% 9% 9% Cons Staples Financials Healthcare Technology Telecom Utilities Industrials Materials Energy/MLPs REITS Top Positions Blackstone Mortgage Trust (BXMT) Procter & Gamble (PG) General Electric (GE) Pepsi (PEP) Pfizer (PFE) International ETF Cash 8

9 MITCHELL TEAM DIVIDEND GROWTH PORTFOLIO Portfolio Structure The portfolio is available as a separately managed account Monthly statements from Morgan Stanley Position level transparency Minimum investment is $1,000,000 Liquidity = Trade date + 3, No lock-ups No incentive fee Contact Information Neil Mitchell, Private Wealth Advisor neil.s.mitchell@ms.com Ben Arnstein, Business Development Associate benjamin.arnstein@ms.com James Lindsay, Client Service Associate james.lindsay@ms.com 9

10 IMPORTANT INFORMATION These materials are for informational and discussion purposes only. The financial data included in these materials is based upon information derived from Morgan Stanley PWM and public sources that are believed to be reliable, but Morgan Stanley PWM does not guarantee the accuracy or completeness of the public source information. Morgan Stanley PWM does not undertake to update this information, and the portfolio composition shown as well as the results discussed may change without notice. This presentation is not a product of Morgan Stanley Smith Barney s Research Department and you should not regard it as a research report. Further, any reference to specific securities herein does not constitute a recommendation that you should invest in those securities. This document and Part II of Morgan Stanley Smith Barney s Form ADV should be thoroughly reviewed for a description of the terms of any particular investments and the material risks associated with it prior to making any investment decision. Legal, accounting and tax restrictions, transaction costs and changes to assumptions may significantly affect the economics and results of portfolio transactions or investments. The information and analyses contained herein are not intended as and should not be construed to be investment, tax or legal advice. Investments and services offered through Morgan Stanley Private Wealth Management, a division of Morgan Stanley Smith Barney LLC, and accounts carried by Morgan Stanley & Co. Incorporated; members SIPC. These strategies involve a high level of risk and may not be suitable for your specific circumstances. US state securities regulations may limit our ability to implement part, or all, of this strategy. In some circumstances it may be difficult for you to sell or realize such investments or obtain reliable information about their value. Where an investment is denominated in a currency other than dollars, changes in rates of exchange may have an adverse effect on the value, price of, or income derived from the investment. Please consult your own tax, legal or other advisors, at both the outset and on an ongoing basis, to determine such suitability. Morgan Stanley Smith Barney and others associated with it may make markets or specialize in, have positions in and effect transactions in the securities that are now or may hereafter be included in the portfolio and may also perform or seek to perform investment banking services for the issuers of those securities. There is no assurance that these other activities will not adversely affect the performance of the investment strategies described in these materials. S&P 500 Index is an unmanaged, market value-weighted index of 500 stocks generally representative of the broad stock market. An investment cannot be made directly in a market index. 10