AGENDA. 1. Thesis 2. Managing Risk 3. Approach 4. Idea Generation 5. Selecting Equities 6. Investing in Funds 7. Summary 8.

Transcription

1 FSG STRATEGIES

2 AGENDA 1. Thesis 2. Managing Risk 3. Approach 4. Idea Generation 5. Selecting Equities 6. Investing in Funds 7. Summary 8. Meet the Team 2

3 [ Thesis] Risk Approach Ideas Equities Fund Investments Summary The Team THE THESIS Role of risk management We believe an investment strategy that is measured, diversified, opportunistic and concentrates on daily risk management, holds the key to building long term wealth. Dual perspective Endeavoring to provide broad access to selective global investments, our analytical approach operates on two levels: We focus on top-down, macro-economic indicators, as well as undertake a rigorous bottom-up analysis of company-by-company fundamentals 3

4 Thesis [ Risk ] Approach Ideas Equities Fund Investments Summary The Team ASSESSING AND MANAGING RISK We believe in the importance of measuring the level of portfolio risk relative to the risk budget we have assigned for a specific model. This process allows Fuchs Schulman Wealth Management Group to maximize capital growth and/or income over long term trends while preserving during significant market pullbacks. 4

5 Thesis [ Risk ] Approach Ideas Equities Fund Investments Summary The Team MANAGING RISK Measured Each FSG Strategy strives to stay within its target risk budget This is designed to keep each strategy in line with its respective goal, while managing portfolio volatility as market conditions change Diversified Diversification has the ability to decrease risk while potentially increasing return By investing in tested, low-correlated investments we strive to minimize total portfolio risk Flexible To achieve its measured risk targets. each FSG Strategy retains a flexible mandate The mandate includes: The ability to raise cash Differ substantially from designated benchmarks Employ sophisticated option strategies to hedge positions, generate portfolio income and protect existing positions Investing in funds that are directionally short the equity and/or fixed income markets when warranted Diversification does not guarantee profit or protect against loss in declining markets. 5

6 Thesis Risk [ Approach ] Ideas Equities Fund Investments Summary The Team OUR INVESTMENT APPROACH Two ways to access the benefits of FSG Management 1. Investment Consulting We apply our analytical, screening and research process to an existing portfolio(s) to offer oversight, strategy and investment recommendations designed to meet client financial objectives FSG Strategies Investment Consulting Fuchs Schulman Wealth Management Group s deeply resourced analytical insights leveraged to provide customized and ongoing investment consulting Investment policy evaluation & maintenance Monitoring and recommendations for diversification and investment selection 2. Discretionary asset management through FSG Strategies We offer dynamic risk based portfolios that are derived from a disciplined investment process and are designed to meet client financial objectives Discretionary Asset Management Fuchs Schulman Wealth Management Group s Strategies Turnkey strategies, targeting both risk and time horizon Ongoing measurement against allocations; make adjustments when warranted 6

7 Thesis Risk [ Approach ] Ideas Equities Fund Investments Summary The Team GLOBAL ASSET ALLOCATION: THE BIG PICTURE Top down analysis for macro-allocation and position weightings First, we construct our allocation by viewing global opportunities Then, we develop targets for weighting equity and fixed income positions We categorize our weightings by: Country Market capitalization Sectors Bottom up analysis for individual security selection We conduct in-depth analysis on a position level basis We generate individual security ideas through Proprietary quantitative screens Sell-side presentations Analyst and industry reports Technical analysis research Top down macro-economic considerations Central bank policies International trade balances Consumer spending Interest rate trends Unemployment Bottom up fundamental considerations Company cash flow Sector research Product strength Management abilities Other technical indicators: P/E; Price/Book, etc. 7

8 Thesis Risk [ Approach ] Ideas Equities Fund Investments Summary The Team OPTIMAL ASSET ALLOCATION 1. Strategic Allocation We analyze long term trends, global demographics, and the ideas that will impact the markets of tomorrow. 2. Tactical allocation 1. Strategic allocation 3. Dynamic modeling Asset allocation These ideas are the keystone to our portfolio allocation. 2. Tactical Allocation Takes advantage of short- to medium-term deviations from strategic ideas and longterm trends. Market Factors Risk Levels Dislocations of Value Macro Environment 3. Dynamic modeling Our ability to manage and monitor individual positions on a daily basis Allocation changes Investment selection opportunities Hedging to reduce risk when warranted Asset allocation cannot eliminate the risk of fluctuating prices and uncertain returns. 8

9 Thesis Risk Approach [ Ideas] Equities Fund Investments Summary The Team THE RESEARCH PROCESS: IDEA GENERATION Our investment team is accomplished with respect to investment experience while also bringing a diversity of backgrounds and industry experience We are in constant contact with investment banks, mutual funds, economists and strategists, public/private companies, and regularly attend industry conferences The extensive network and due diligence necessary to effectively run our business provides fertile ground for idea generation Global economic trends Our team conducts extensive due diligence with global economic data to uncover trends and opportunities Quarterly analysis of global economics, asset classes, correlations, valuations, money supply, interest rates, inflation and sovereign stability Quantitative screening We maintain access to quantitative screening tools and extensive financial databases Proprietary quantitative screens are performed with the goal of identifying high-quality companies that show financial strength and maintain reasonable equity valuations Fund selection screening We utilize third party research companies for screening the mutual fund & ETF universe and generating a watch list for new positions to consider 9

10 Thesis Risk Approach [ Ideas] Equities Fund Investments Summary The Team RIGOROUS FUNDAMENTAL RESEARCH We conduct fundamental analysis to: Assess the strength of our individual securities Monitor existing positions Provide extensive opportunities for idea generation We analyze a company s entire value chain and assess its competition Investigating the reasons behind margin pressure or subtle decline in market share for a potentially attractive investment opportunity At the opposite end of the spectrum, a company s increasing success could open the door to potential investment ideas: Both within and outside of the direct supply chain From peripheral beneficiaries from both within and outside of the company s industry Company-specific research and monitoring also incorporates macro-economic insights in overall portfolio positioning with respect to asset allocation 10

11 Thesis Risk Approach Ideas [Equities] Funds Summary The Team SELECTING EQUITIES From Individual Equity Analysis and Idea Generation; through Sub-Portfolio and Strategy-Level Analyses, our process is both bottom-up and opportunistic We endeavor to recognize high-quality companies with strong balance sheets and cash flows that have demonstrated an ability to achieve superior sustainable growth Individual securities are identified through our proprietary screening process and then evaluated thoroughly via fundamental security analysis We focus on finding best-in-class selections that may outperform in both positive and negative market conditions The process involves evaluation and selection of individual equity securities, evaluation of the equity portfolio as a standalone component and evaluation as a complete portfolio at the FSG Strategy level. Generally, we employ a value-based bias, but may pay a premium for higher sustainable growth 11

12 Thesis Risk Approach Ideas [Equities] Funds Summary The Team EQUITY SELECTION; PROPRIETARY SCREENING Focuses on company-specific metrics, technical indicators Evidence of potential for long-term sustainable growth and Return on Invested Capital (ROIC) relative to the cost of capital Metrics include growth rates of revenue, earnings and cash flow, ROIC, debt-to-total capital and profit margins Model used for: Initial equity selection Evaluation of existing positions Development of watch lists 12

13 Thesis Risk Approach Ideas [Equities] Funds Summary The Team THE ROLE OF FUNDAMENTAL SECURITY ANALYSIS Involves an in-depth analysis of the financial statements Assessment of the financial statements focuses heavily on quality of earnings and evaluation of cash oriented metrics. Assessment of the business is conducted at the macro-economic, industry and company level. Considerations include the impact of the macro-economic environment, the company s competitive position within its industry and the growth, profitability, financial health and management of the company. No single metric is relied upon Heavier weight is given to metrics that are less susceptible to the intricacies of accrual accounting such as the P/E ratio 13

14 Thesis Risk Approach Ideas Equities [Funds] Summary The Team FUND INVESTMENT PROCESS 14

15 Thesis Risk Approach Ideas Equities [Funds] Summary The Team STRINGENT QUANTITATIVE ANALYSIS Style Analysis Volatility/Risk Analysis Performance Purpose: To understand what potential investments are correlated to Key Factors: Quadratic Optimization R-Squared Tracking Error Purpose: To properly assess the amount of risk an investment has taken and to determine if it is appropriate Key Factors: Standard Deviation Sharpe Ratio Sortino Ratio Drawdown Downside Deviation Up/Down Capture Ratios Purpose: To judge the effectiveness of an investment and its process on a historical basis Key Factors: Time periods Since inception Trailing Calendar year Various rolling periods Tailored points in time Attribution analysis 15

16 Thesis Risk Approach Ideas Equities [Fund Investments] Summary The Team IN-DEPTH QUALITATIVE ANALYSIS Objective Discover the inner workings of a fund and its investment process Conduct on-site visits to meet with team members To gain a level of comfort with the structure of the investment firm Gain access to research and resources that can be applied beyond specific funds and to the FSG Strategies asset allocation Profiling Steps The Firm Ownership Structure Technology Infrastructure The People Compensation Structure and Retention Plan Recruiting Tactics Turnover The Portfolio Team Structure and Responsibilities Risk Management Process for Idea Generation Buy/Sell Process Investment Philosophy Process to evaluate individual securities Portfolio Construction Description of Performance in Different Markets 16

17 Thesis Risk Approach Ideas Equities Fund Investments [Summary] The Team SUMMARY The Fuchs Schulman Wealth Management Group Difference Emphasis on risk management Our approach to risk management, we believe, holds an important key to building long term wealth. Dual perspective To maintain our global view with an on-the-ground company research capability, We focus on both top-down, macro-economic indicators, as well as undertake a rigorous bottom-up analysis of company-by-company fundamentals. Dynamic Modeling Maintaining tactical models that allow Fuchs Schulman Wealth Management Group to seek opportunities by capitalizing on market dislocations of asset prices 17

18 Thesis Risk Approach Ideas Equities Fund Investments Summary [The Team] WHO WE ARE: OUR PRINCIPALS David P. Schulman, CFP David P. Schulman, CFP, Managing Director Investments, Senior PIM Portfolio Manager is a founding member of the Fuchs Schulman Wealth Management Group of Wells Fargo Advisors and co-creator of FSG Strategies the group s proprietary asset management program. David has over 19 years of private wealth planning and asset management experience in the high net worth marketplace. While at Morgan Stanley ( ) and Citigroup ( ), David was responsible for building out customized private client portfolios while researching individual U.S. equity securities and institutional funds. David utilized firm capital market assumptions to design and manage client global allocation models. Currently, David is a co- lead Senior-PIM Portfolio Manager, for his group s proprietary asset management program - FSG Strategies. Through FSG Strategies, David and his team currently manage and consult to over $1.2 billion in assets, spread amongst their Private and Institutional client assets. David, along with the investment committee members for FSG Strategies is directly responsible for all final decisions as it relates to global allocation, equity, fixed income, alternative investment and hedging position changes. David is involved with all tactical strategy changes as well as the dynamic shifts that occur based on daily asset movements. David received a Bachelor of Science degree from the University at Albany in 1996 with a Business Major concentration and received the CERFIFIED FINANCIAL PLANNER designation from the New York University School of Continuing and Professional Studies in David also holds the following securities registrations: Series 7, 63, 65,

19 Thesis Risk Approach Ideas Equities Fund Investments Summary [The Team] WHO WE ARE: OUR PRINCIPALS George P. Fuchs, CFP, AIF, CLU George P. Fuchs, CFP, AIF, CLU Managing Director Investments is a founding Member of the Fuchs Schulman Wealth Management Group of Wells Fargo Advisors, overseer of the Institutional Wealth Management division of the group, and cocreator of FSG Strategies, the group s Asset Management division. He focuses his efforts on partnering with U.S. organizations for their employer-sponsored retirement benefits, executive carve-out plans and endowments, providing both Asset Management and Investment Consulting Services. His clients include organizations needing strategies to mitigate financial risk, improve allocation of resources; and have systems implemented to help achieve performance, simplicity and funding goals. George co-created FSG Strategies in 2008 as an entire portfolio solution modeled to maximize the group s intellectual capital for investment decision making. These portfolio models are in place matching specific Investment Policy parameters for allocation and return. Overall, FSG Strategies are designed with model-specific, risk allocation parameters, and risk allocation DNA is apparent through all models as there are processes in place to minimize risk for a given return goal. George and his group joined Wells Fargo Advisors in 2008, after an eight-year tenure at Citi Smith Barney and a three-year tenure at Morgan Stanley in the same capacity, having partnered with companies and organizations for over 17 years. George holds the series 7, 63, 65 and 31 registrations, and his credentials include the professional designations of Accredited Investment Fiduciary, Chartered Retirement Plans Specialist, Chartered Life Underwriter and the CERTIFIED FINANCIAL PLANNER certification from New York University. He received a Bachelor of Science degree from the University at Albany. 19

20 Thesis Risk Approach Ideas Equities Fund Investments Summary [The Team] WHO WE ARE: MEET THE TEAM Gregory A. Carafello Gregory A. Carafello, Associate Vice President Investments, joined the Fuchs Schulman Wealth Management Group as a Registered Financial Advisor in 2012 to assist with Private and Corporate Wealth Management. Greg joined the group after four years of experience in the Foreign Exchange and Commodities markets, where he worked at Gain Capital Group to develop macro-economic investment strategies for high net worth individuals and institutional clients. His extensive understanding of technical and fundamental approaches to the global marketplace adds depth and strength to the team's knowledge base. His insights are frequently sought by the team s investment committee, who tap into Gregory s knowledge of technical analysis as it relates to the equity, fixed income and currency markets. His professional designations and registrations include: Chartered Market Technician Level 1, Series 3, 7, 34, 66 registrations. 20

21 Thesis Risk Approach Ideas Equities Fund Investments Summary [The Team] WHO WE ARE: MEET THE TEAM Charles ( Chuck ) Balis Charles ( Chuck ) Balis, Managing Director-Investments, has been in the investment services industry for over 30 years. He initiated his wealth management carrier at Wertheim & Company's bond trading and Institutional equity Sales Dept. Upon departing Wertheim, he joined Oppenheimer & Company, as a co- manager in the research department and member of the firm s Investment Policy Committee. Chuck was responsible for managing the firm s own corporate account, embedding his personal investment ideas into the Oppenheimer retail sales force. After a stint as acting advisor to the NYC Comptrollers Department, Chuck and a partner created their own investment firm, Balis & Zorn, a NYSE member firm. It was at this time that Chuck begin working in discretionary asset management and created his own wealth management process. Upon joining Wells Fargo Advisors, Chuck has maintained an equity-based model that seeks undervalued opportunities and attractive yields. His professional registrations include: Series 7, 63 and

22 Thesis Risk Approach Ideas Equities Fund Investments Summary [The Team] WHO WE ARE: MEET THE TEAM Daniel D. Sottosanti Daniel D. Sottosanti, Registered Client Associate, joined the Fuchs Schulman Wealth Management Group in 2014 to fulfill the role of Junior Analyst. Daniel earned his B.S. in Business Administration with a concentration in Finance and minor in Economics from Ithaca College. At Ithaca, Daniel was the President and CFO of the Ithaca College Investment Club and directly managed assets in the student managed fund program, where he co-managed and served as a healthcare and technology analyst for three portfolios; two US equity funds and one long-short market neutral hedge fund. Daniel s current responsibilities include quantitative and qualitative investment analytics and research. This includes due diligence used by the team to help make tactical decisions on their FSG Strategies and for presentations delivering the group s advice to institutional investment committee clients on investment policy, diversification, asset allocation, investment selection and performance reporting. He also maintains relationships with investment managers, industry contacts, advisers and sell side analysts providing additional support, research and breadth to the Fuchs Schulman Wealth Management Group. Daniel is currently a Level I Candidate in the Chartered Financial Analyst (CFA) program. Daniel also holds the Series 7 and 66 registrations. 22

23 This and/or the accompanying information was prepared by or obtained from sources that Wells Fargo Advisors believes to be reliable, but Wells Fargo Advisors does not guarantee its accuracy or completeness. Any market prices are only indications of market values and are subject to change. The material has been prepared or is distributed solely for information purposes and is not a solicitation or an offer to buy any security or instrument or to participate in and trading strategy. Additional information is available up request. The PIM Program is not designed for excessively traded or inactive accounts, and may not be suitable for all investors. Please carefully review the Wells Fargo Advisors advisory disclosure document for a full description of our services. The minimum account size for this program is $50,000. Investment and insurance products: NOT FDIC-Insured NO Bank Guarantee MAY Lose Value Wells Fargo Advisors, LLC, Member SIPC is a registered broker-dealer and separate non-bank affiliate of Wells Fargo & Company 23