NorthCoast ETF Portfolio Solutions

Transcription

1 NorthCoast ETF Portfolio Solutions Investor Presentation NorthCoast Advisory Team northcoastam.com

2 Executive Summary PRESENTATION OVERVIEW Who is NorthCoast? What does NorthCoast do? NorthCoast ETF Solutions Almost 30 year institutional investment firm, specializing in quantitative research and constructing risk-managed solutions. Located in Greenwich, CT managing $1.8B with a 30+ member team. Growing leader in ETF managed solutions with proprietary market exposure and ETF selection model. Providing holistic solutions to retail investors. A suite of low cost ETF-based wealth solutions, designed for today s challenges: fees, income, down-side risk management. INCOME Diversified Core Diversified Growth GROWTH Tactical Income Tactical Growth Fixed Income U.S. Equity International Equity Alternative Firm information as of 12/31/

3 Experience. Stability. Performance. NorthCoast has established itself as a leader in systematic investment management and the construction of risk-managed portfolios Firm Evolution Recognition Partnerships 1980s 1990s Asset Allocation mutual funds / #1 SMA ranking by Fourth- Quarter Returns CAN SLIM Investment Program Individual stocks 2005 NorthCoast begins its 2013 partnership with Investor s Business Daily to construct CAN SLIM powered investment strategies Financial Times 300 Top Registered Investment Adviser ETF Managed Solutions ETFs ishares by BlackRock and NorthCoast team up to construct ETF-managed portfolios utilizing the universe of ishares ETFs Tactical Income achieves Top Gun status ishares and BlackRock are registered trademarks of BlackRock, Inc. and its affiliates ( BlackRock ) and are used under license. BlackRock makes no representations or warranties regarding the advisability of investing in any product or service offered by NorthCoast Asset Management LLC. BlackRock has no obligation or liability in connection with the operation, marketing, trading or sale of any product or service offered by NorthCoast. The 2015 Financial Times Top 300 Registered Investment Advisors is an independent listing produced by the Financial Times (June, 2015). The FT 300 is based on data gathered from RIA firms, regulatory disclosures, and the FT s research. As identified by the FT, the listing reflected each practice s performance in six primary areas, including assets under management, asset growth, compliance record, years in existence, credentials and accessibility. Neither the RIA firms nor their employees pay a fee to The Financial Times in exchange for inclusion in the FT 300. PAST PERFORMANCE DOES NOT GUARANTEE OR INDICATE FUTURE RESULTS. 3

4 A Quantitative Approach We believe that behavioral biases make it impossible to out wit the market -- Investors and portfolio managers can be their own worst enemies A researched and repeatable process rooted in common sense will outperform over time. Markets reward certain factors and punish others. Our quant models (market exposure model and our ETF selection model - ETF Harmony ) are based on fundamental rationales, thorough analysis, rigorous testing, and continuous factor research. Wealth solutions to address today s most pressing needs comprehensive core solutions suitable for retail investors and satellite solutions to fill gaps and complement other products in a client s portfolio. Disciplined, data-driven investing outperforms intuition over time. 4

5 Addressing Today s Challenges & Opportunities Investor Challenges Income Low yield environment is insufficient to fund retirement Market Drawdown Drawdowns of and 2008 eliminated years of growth Risk-Managed Growth Growth in retirement is required as investors live longer. Costs Focus on cost reduction in the face of low yields & fleeting alpha ETFs Transparency broad market exposure in a single position 5

6 Daily Investment Process NorthCoast applies a multi-step investment process to construct, manage and implement its portfolio solutions MARKET OUTLOOK ETF HARMONY PORTFOLIO CONSTRUCTION RISK MANAGEMENT Proprietary market outlook determined by 40+ signals across four dimensions identifies opportunities & risks Daily market signal analysis Ongoing research assessment of market signals ensures accuracy and relevance Rigorous research shows ETFs exhibit common characteristics before gains Daily scoring of 150+ ETFs with 20+ data signals Seek ETFs with superior riskadjusted potential Dynamic daily optimizer seeks to properly maintain risk-adjusted portfolio Assessment of total transaction costs and estimate of implementation shortfall Higher concentrated portfolio designed to enhance long-term alpha Proprietary risk model Controls embedded through investment process Combination of active and passive risk management methods Daily monitoring of positions 6

7 Determining Asset Allocation Proprietary market outlook model utilizes 40+ signals across four dimensions to identify optimal market exposure TECHNICAL Momentum Reversal Fear SENTIMENT Consumers Producers Credit Surprise MACRO- ECONOMIC Leading Indicators Federal Reserve Jobs Geopolitical VALUATION Historical Forward Rate Adjusted Inflation Adjusted NorthCoast Market Equity Exposure Model 1/1/1996-9/30/2016 Equity Exposure Technicals Sentiment Macroeconomic Valuation 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% The chart above shows a hypothetical simulation of NorthCoast s proprietary market outlook analysis tool. This simulation is generated by using multiple data points across four broad dimensions including Technical, Sentiment, Macroeconomic, and Valuation indicators. The daily result determines equity exposure. It does not represent actual equity exposure. 7

8 Modern Logic to ETF Selection ETF Harmony Describes NorthCoast s approach to evaluating and selecting Exchange Traded Funds (ETFs). Highlights the use of four categories of factors/signals, with of what works, and what doesn t: Technical Macroeconomic Sentiment Valuation The power of analytics is nothing new in modern-day business. Sports, medicine, and even college admissions utilize comprehensive sets of data to discover, interpret and communicate meaningful patterns and trends. The same is true in how NorthCoast scores and selects ETFs for its client portfolios. Our research demonstrates that using a multi-factor approach to selecting ETFs is powerful because each factor targets a specific aspect of an ETF, thus painting a complete picture of its future return potential. Click here for a downloadable version of the ETF Harmony whitepaper - An excerpt from the research whitepaper, ETF Harmony 8

9 Modern Logic to ETF Selection NorthCoast scores a variety of ETFs across multiple asset classes utilizing a combination of factors (signals) that drives performance ETF Harmony - In Action SCORES ARE FOR ILLUSTRATIVE PURPOSES ONLY. Individual securities are for comparative purposes only and NorthCoast may not recommend these positions at the time of publication. Score-based model is a proprietary security selection system of NorthCoast Asset Management. 9

10 Core ETF Portfolio Solutions Diversified Core Balanced approach to growth & income 50% ACWI / 50% Global Bonds Fully-Invested Diversified Growth Growth by means of capital appreciation and income 70% ACWI / 30% Global Bonds Fully-Invested Holistic core solutions for retail investors with a balanced risk profile Actively managed moderate shifts to less risky assets in volatile markets Global equity, fixed income and alternatives for enhanced diversification and risk reduction 10

11 Satellite ETF Portfolio Solutions Complement to existing products to address specific needs multi-asset income, global growth Tactical shifts for risk management & alpha latitude to de-risk in volatile markets Alternative to expensive mutual funds, hedge funds, or less liquid high alpha products Tactical Income Multi-asset income to complement growth / equity assets JPM Global Bond Aggregate 100% Tactical Shifts Tactical Growth Global growth to complement domestic equity / bond assets Morningstar World Allocation 100% Tactical Shifts 11

12 Portfolio Solutions Summary Designed to meet the broad wealth management goals of clients from asset accumulation through retirement INCOME GROWTH TACTICAL INCOME DIVERSIFIED CORE DIVERSIFIED GROWTH TACTICAL GROWTH Overview Benchmark A conservative plan, emphasis on income JPM Global Bond Aggregate (Global Bonds) Balanced approach to growth & income Growth by means of capital appreciation and income Capital appreciation with secondary objective of capital preservation 50% ACWI / 50% Global Bonds 70% ACWI / 30% Global Bonds Morningstar World Allocation Allocation Shifts 100% 20% 30% 100% Typical Asset Allocation Opportunistic Market Environment Fixed Income U.S. Equity International Equity Alternative 12

13 Active Solutions for a Changing Market ETF strategies actively adjust to changing market conditions to deliver on the desired outcome of the particular investment strategy Asset Allocation Range Sample Allocation In an Opportunistic market environment Tactical Income Diversified Core Fixed Income U.S. Equity International Equity Alternative < 0% - 25% > < 50% - 100% > < 0% - 25% > < 40% - 60% > < 40% - 60% > Diversified Growth < 20% - 50% > < 50% - 80% > Tactical Growth < 0% - 100% > < 0% - 100% > 0% 20% 40% 60% 80% 100% The Sample Allocation and Asset Allocation Range are displayed for information purposes only. They can change and are not a recommendation to allocate a portfolio in this manner. 13

14 Today s Solutions for Tomorrow s Challenges Low Cost Competitive active management fee, 100% low-cost ETFs, strictly fee-based Simple & Transparent 8-15 holdings Actively Managed Quantitative active management process to reduce volatility and minimize drawdowns, and de-risk in stressed markets History of Success Leverage NorthCoast s almost 30 years of experience in tactical management ETF Harmony NorthCoast s quantitative ETF ranking & selection process alpha and risk management focus 14

15 Appendix 15

16 Strength in Numbers Portfolio Management Patrick Jamin CFA, FRM Chief Investment Officer Julia Zhu CFA, FRM SVP Market & Security Research Yaqiu Li SVP Portfolio Construction Slava Malkin Senior Vice President Jason Krugly Vice President Sumanth Amarchinta Vice President Partner, Numeric Investors (European / World Fundamental Statistical Arbitrage) Partner, Portfolio Manager, Standard Pacific Capital; Global Long/Short Equity Fund Senior Quantitative Analyst, Invesco; Global Quantitative Fund M.B.A., Harvard Business School, Baker Scholar, Arthur Sachs Scholar M.S. Telecommunications, Ecole Nationale Superieuredes Telecommunications de Paris Ingenieur de I Ecole Polytechnique, Ecole Polytechnique Vice President, Research Affiliates - Quantitative research; equities and asset allocation Associate, First Quadrant Conducted research on GTAA and tactical currency allocation Master of Economics, Yale University, PhD Candidate M.B.A. with concentration in Finance, University of Southern California Climate Modeling National Key Lab of Atmospheric Science, Chinese Academy of Sciences M.S. Quantitative and Computational Finance & M.S. in Statistics, Georgia Tech PhD Candidate CFA Level III Candidate Quantitative currency trading strategies BNP Paribas Portfolio Manager of global macro strategies Research in Global Tactical Asset Allocation strategies Deutsche Asset Management M.S. in Statistics, Harvard University Research experience with Bank of America, Merrill Lynch, Credit Suisse, Deutsche Bank M.S. in Financial Engineering, Baruch College B.S. & M.S. in Computer Science, Polytechnic Institute of New York University Senior Investment Analyst, Pyramis Global Advisors - Quantitative research M.S. in Computer Engineering, Rochester Institute of Technology B.S. in Electrical Engineering, Roorkee Indian Institute of Technology 1

17 Important 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 PERFORMANCE 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. InvestmentNews #1 SMA Ranking - PSN/Informa Top Gun - Financial Times 300 Top RIA