The Cresfort Investment Group at Morgan Stanley Capabilities Overview

Transcription

1 The Cresfort Investment Group at Morgan Stanley Capabilities Overview

2 Table of Contents I. The Cresfort Investment Group Overview II. Equity Management Overview III. Fixed Income Management Overview IV. Resource Summary V. Biographies VI. Recommended Portfolio VII. Important Information 1

3 The Cresfort Investment Group Overview

4 Portfolio Management Program Established in 1979 to provide individual investors with a level of personalized portfolio management typically reserved for major institutional investors All portfolios are managed individually on a fully discretionary basis by Financial Advisors at Morgan Stanley who have been qualified by the firm to independently manage client assets based on training, experience and commitment to service As your Portfolio Manager, I and my team can offer you: Direct access to the investment professionals managing your portfolio Personalized service A disciplined, multipart investment process Ongoing client communications and reporting Access to the intellectual capital and global resources of Morgan Stanley 3

5 The Cresfort Investment Group: What We Do Our Mission To provide a high level of service for the high net worth client by tailoring portfolios to meet unique needs, goals, and objectives. We accomplish this by forging a relationship between the client, a Morgan Stanley Financial Advisor, and The Cresfort Investment Group. Your Financial Advisor will Your Portfolio Manager will Identify each client s specific financial profile Review each client s tolerance for risk Work with the Portfolio Manager in outlining an appropriate investment strategy Communicate changes in needs or objectives to the Cresfort team Design, construct, and manage a diversified, risk controlled investment portfolio designed to meet each client s goals and objectives Tailor the portfolio to fit circumstances surrounding client-specific situations Monitor the portfolio and modify accordingly 4

6 The Cresfort Investment Group: A Relationship The key to this relationship is ongoing communication between parties. Client Financial Advisor Portfolio Manager Source: Global Wealth Management Investments (GWMI). 5

7 The Cresfort Investment Group: Our Value Added The Cresfort Investment Group provides value through our: Profiling of Clients Collaborate with Financial Advisor to create an in-depth financial profile of the client s needs, goals, and objectives. Tailored Portfolio Management Build and manage an investment portfolio tailored to meet each client s unique requirements. Tax Efficient Management Each client s specific tax situation is considered when managing the investment portfolio, including tax bracket, gains, carry forward, etc. Breadth and Depth of Investment Experience Leverage the Cresfort Investment Group s breadth and depth of experience for equity, fixed income, and balanced portfolio management. Manager Access Ongoing communication can help strengthen and maintain relationships while providing a higher level of service. Source: Global Wealth Management Investments (GWMI). 6

8 The Cresfort Investment Group: Portfolio Management Options Traditional Equity Portfolio Cresfort Customized Multi-Cap Equity Portfolio Fixed Income Portfolio Cresfort Customized Fixed Income Portfolio Traditional Balanced Portfolio Combination of Traditional Equity and Fixed Income Portfolio 7

9 The Cresfort Investment Group Equity Management Overview

10 The Cresfort Investment Group: Our Investment Philosophy Great Companies Good Valuations Opportunity for Long-term Investment Success High returns on capital Strong, motivated management Consistent growth + = Price / Cash flow Price / Earnings P/E / Growth P/E / ROE OR + = Good Companies Great Valuations Opportunity for Long-term Solid market position Attractive relative Investment Success History of earnings P/E & P/CF growth Strong Balance Sheet Source: Global Wealth Management Investments (GWMI). 9

11 The Cresfort Investment Group: Our Assessment of Intrinsic Value CFROI (%) Positive Spread Discount Rate (Cost of Capital) Neutral Neg. Spread Strategy Options for Wealth Creation 1. Increase 1. Increase CFROI 1. Increase CFROI or hold CFROI 2. Grow Assets 2. Then Grow 2. Contract Assets Source: Credit Suisse HOLT. HOLT, a division of Credit Suisse, offers corporate performance, valuation, and strategic analysis frameworks. A provider of valuation software and independent research, HOLT services clients throughout North America, Europe and Asia Pacific. The company provides a state-of-the-art valuation platform and database covering approximately 18,000 companies in 28 countries. HOLT is known in the marketplace for its strong client servicing and objective valuation work Credit Suisse and its subsidiaries and affiliates. Used by permission. All rights reserved. CFROI is a registered trademark of Credit Suisse or its affiliates in the United States and other countries. CFROI Cash Flow Return on Investment 10

12 The Cresfort Investment Group: Our Portfolio Construction Process 1.) Start with a 1,600+ Stock Universe 1,600+ Stock Universe 2.) Screen for Return on invested capital Cost of capital This results in 750 Stocks 4.) Perform valuation Discount future cash flows/earnings Create price targets Rank by expected total return Review for direction of earnings dddrevisions Arriving at Stocks Source: Global Wealth Management Investments (GWMI). 750 Stocks 375 Stocks 100 Stocks 3.) Apply fundamental analysis Strength of Management Industry Competitive Positioning Opportunities for Growth Determine downside risk potential Producing a Stock Focus List 5.) Construct the portfolio Tailored to meet client s individual objectives Investment goals Specified market cap Income Needs Diversified by economic sectors Resulting in a Name Portfolio 11

13 The Cresfort Investment Group: Our Ongoing Review/Sell Discipline A position will be reviewed for sale in a client s portfolio when its after-tax expected riskreturn contribution has become less favorable relative to other investment opportunities. This can occur when: The stock has a high relative valuation and deteriorating sentiment Alternative purchase idea provides better risk/return characteristics Factors affecting a company s fundamentals could include: Deteriorating business position (loss of market share, reduced industry growth, shrinking margins) Erosion of intrinsic value (increased leverage, dilutive acquisition or stock issuance, etc.) Tax considerations include: Client s individual tax bracket Short-term and long-term gains and losses Harvesting gains and losses throughout the year Source: Global Wealth Management Investments (GWMI). 12

14 The Cresfort Investment Group: Our Continuous Cycle of Management Stock Universe Screening Review Individual Client Profile Apply Fundamental Investment Research Portfolio Management Objectives, Risk Tolerance, Tax Requirements Utilize Proprietary Resources and Tools Database and System Overlays 13

15 The Cresfort Investment Group Fixed Income Management Overview

16 The Cresfort Investment Group: Fixed Income Management Overview Fixed Income Management includes: Regular analysis of credit, interest-rate, and liquidity risk Finding appropriately valued securities that fit your risk profile and income goals Investing to capitalize on values consistent with the fundamental realities of the marketplace and your goals Comprehensive management of individual bond issues over time Source: Global Wealth Management Investments (GWMI). 15

17 The Cresfort Investment Group: Fixed Income Investment Process The Portfolio Manager works with the Financial Advisor to develop guidelines for the three key decisions made during the ongoing management of fixed income portfolios. Client Investment Objectives Level of Interest Rate Risk 1 2 Sector Allocation 3 Security Selection Identify objectives and constraints. Define guidelines and benchmark. Determine interest rate risk appropriate to achieve client objectives. Allocate according to tax status and relative value. Build initial portfolio and manage to market opportunities. Source: Global Wealth Management Investments (GWMI). 16

18 The Cresfort Investment Group: Fixed Income Investment Process Interest Rate Risk Appropriate interest rate risk is determined based on individual client objectives: Client sensitivity to price volatility Need for principal and/or interest cash flows Source: Global Wealth Management Investments (GWMI). 17

19 The Cresfort Investment Group: Fixed Income Investment Process Sector Allocation Client s Tax Circumstances Federal/local tax bracket AMT status Loss carry forward Gain/loss constraints Client s Constraints Minimum credit rating allowed Price volatility Allowed sectors Liquidity requirements Market Valuation Valuation of muni vs. taxables Relative valuation across taxable ddsectors Technical supply and demand ddfactors Asset Allocation Decision 18

20 The Cresfort Investment Group: Fixed Income Investment Process Security Selection & Trading Credit Analysis Market Access Trading Evaluate financial and dfundamental strength of dissuer Direct access to large dnumber of broker dealers Relative Value Balance sheet analysis Participation in both dprimary and secondary dmarkets Best execution Industry insights Ongoing flow of market dinformation 19

21 The Cresfort Investment Group Resource Summary

22 The Cresfort Investment Group: Resource Summary Breadth and and Depth of Investment Experience Client and FA Communication Equity and and Fixed Fixed Income Income Perspectives Dedicated Team Approach to to Fully Utilize Resources Our Client- Centric Approach Information System and Database Overlays Proprietary Models and Screening Tools Research from Top one Research of the Top Teams Research on Teams Wall on Wall Street Street Source: Global Wealth Management Investments (GWMI). 21

23 The Cresfort Investment Group Biographies

24 Mark H. Felder, CFA Senior Portfolio Management Director Executive Director Wealth Management The Cresfort Investment Group at Morgan Stanley Began career in the investment industry in 1981 Investment industry experience as an Analyst, Director of Research and Portfolio Manager Experienced in managing personal, retirement, foundation, and pension/profit sharing accounts Former Director of Research at The Rothschild Company, Former Research Analyst at Legg Mason Wood Walker, Former Research Analyst at National Bank of Detroit M.M. - J.L. Kellogg Graduate School of Mgmt. (Northwestern University) 1981; B.S. - Drexel University with highest honors 1980 Former President and current member of Baltimore CFA Society Achieved Chartered Financial Analyst (CFA ) designation in 1984 Address: 650 South Exeter Street Suite 1100 Baltimore, MD Tel. No.: (410) Fax. No.: (443) mark.h.felder@morganstanley.com 23

25 Eric S. Williams, CFA Senior Portfolio Management Director Senior Vice President Wealth Management The Cresfort Investment Group at Morgan Stanley Began career in the investment industry in 1981 Investment industry experience as an Analyst and Portfolio Manager Former Director of Equity Products at TradeStreet Investment Associates, an institutional client advisor wholly owned by Bank of America, employed also at its predecessors, Former Research Analyst and Portfolio Manager at what is now JP Morgan & Chase Co., MBA - Indiana University - Kelley School of Business 1981 and summa cum laude graduate from East Carolina University 1979 Achieved Chartered Financial Analyst (CFA ) designation in 1984 Holds FINRA Series 7, 63 & 65 licenses Address: West Catawba Avenue Suite 300 Cornelius, NC Tel. No.: (704) Fax. No.: (704) eric.s.williams@morganstanley.com 24

26 Michael J. Walker, CFA Portfolio Management Director Senior Vice President Wealth Management The Cresfort Investment Group at Morgan Stanley Began career in the investment industry in 1981 Investment industry experience as an Analyst and Portfolio Manager Former Chief Investment Officer and Senior Portfolio Manager for Oak Tree Portfolio Management, Former Director of Research - Chapin, Davis, Inc., Former Research Analyst at Legg Mason Wood Walker, MBA - Kenan-Flagler Business School (University of North Carolina) 1981 ; B.A. - Middlebury College 1976 Achieved Chartered Financial Analyst (CFA ) designation in 1986 Holds FINRA Series 7, 27 & 63 licenses Address: 650 South Exeter Street Suite 1100 Baltimore, MD Tel. No.: (410) Fax. No.: (443) michael.j1.walker@morganstanley.com 25

27 Mark N. McCall, CFA Portfolio Management Director First Vice President Wealth Management The Cresfort Investment Group at Morgan Stanley Began career in the investment industry in 1987 Investment industry experience as an Analyst, Director of Research and Portfolio Manager Former Senior Portfolio Manager - Paladin Investment Associates, Former Senior Portfolio Manager - TradeStreet Investment Associates, Former Director of Equity Research at TradeStreet Investment Associates, an institutional client advisor wholly owned by Bank of America, 1996 Former Equity Analyst - Bank of America (and predecessor organizations), , Former Manager of Investor Relations - NationsBank, MBA - University of North Carolina and B.S. Wake Forest University Achieved Chartered Financial Analyst (CFA ) designation in 1990 Holds FINRA Series 7 & 63 licenses Address: West Catawba Avenue Suite 300 Cornelius, NC Tel. No.: (704) Fax. No.: (704) mark.n.mccall@morganstanley.com 26

28 Eric S. Franz, CFA Portfolio Management Director First Vice President Wealth Management The Cresfort Investment Group at Morgan Stanley Began career in the investment industry in 1993 Investment industry experience as an Analyst and Portfolio Manager Re-joined Legg Mason Portfolio Management as a Portfolio Manager in 2004 Portfolio Specialist with Legg Mason Institutional Funds, Associate Portfolio Manager and Equity Analyst with Legg Mason Portfolio Management (Now Cresfort), Associate Portfolio Manager and Equity Analyst with Carroll Financial Associates, Account Executive with T. Rowe Price, M.S. Loyola University Maryland 1998; B.S. Towson University 1992 Serves as an active member of the CFA Institute and the Baltimore CFA Society Achieved Chartered Financial Analyst (CFA ) designation in 2003 Holds FINRA Series 6, 7 & 65 licenses Address: 650 South Exeter Street Suite 1100 Baltimore, MD Tel. No.: (410) Fax. No.: (443) eric.franz@morganstanley.com 27

29 Russell A. Phelps, CFA Portfolio Management Director First Vice President Wealth Management The Cresfort Investment Group at Morgan Stanley Began career in the investment industry in 2000 Investment industry experience as an Analyst, Director of Research and Portfolio Manager Portfolio Manager for the TechSelect and Total Return model portfolios 15 years of prior work experience as an Engineer and Sales Engineer in the semiconductor and electronics industries MBA Robert H. Smith School of Business, University of Maryland (concentration in Finance and Accounting) 1995 B.S. in Engineering from Loyola University Maryland 1986 Serves as an active member of the CFA Institute and the Baltimore CFA Society Achieved Chartered Financial Analyst (CFA ) designation in 2006 Holds FINRA Series 7 & 66 licenses Address: 650 South Exeter Street Suite 1100 Baltimore, MD Tel. No.: (410) Fax. No.: (443) russell.phelps@morganstanley.com 28

30 Beth Bartz Portfolio Management Director First Vice President Wealth Management The Cresfort Investment Group at Morgan Stanley Began career in the investment industry in 1992 Investment industry experience as a Portfolio Manager and Trader Joined Legg Mason Portfolio Management as Vice President, Fixed Income Portfolio Manager in 2004 Former Vice President and Portfolio Manager at Vanderbilt Capital Advisors, LLC in New York, NY, Former Mortgage and Asset Backed Trader for Alex Brown and Sons, Inc. for retail and institutional clients, B.B.A. in Finance from Loyola University Maryland 1991 Holds FINRA Series 7 & 66 licenses Address: 650 South Exeter Street Suite 1100 Baltimore, MD Tel. No.: (410) Fax. No.: (443) beth.bartz@morganstanley.com 29

31 Janice M. Wade Senior Client Service Associate The Cresfort Investment Group at Morgan Stanley Began career in the investment industry in 1995 Joined Cresfort in 1997 as Senior Executive Assistant to CIO Responsible for marketing, proposals, administrative duties and internal operations for Cresfort team Provides client services to Morgan Stanley Portfolio Managers, Financial Advisors and support staff Former Office Manager for Investment Management Services Legg Mason, Inc B.S. in Education from Northeastern University in Boston, MA Address: 650 South Exeter Street Suite 1100 Baltimore, MD Tel. No.: (410) Fax. No.: (443) janice.m.wade@morganstanley.com 30

32 Eric S. Sappington Portfolio Management Associate The Cresfort Investment Group at Morgan Stanley Began career in the investment industry in 2010 Responsible for marketing efforts, internal operations and constructing proposals for Cresfort team Provides client services to Morgan Stanley Portfolio Managers, Financial Advisors and support staff Former Operations Analyst and Associate within the Shared Services and Banking Operations group at Morgan Stanley, focusing on Fixed Income Derivatives B.B.A. in International Business from Loyola University Maryland Holds FINRA Series 7 & 66 licenses Address: 650 South Exeter Street Suite 1100 Baltimore, MD Tel. No.: (410) Fax. No.: (443) eric.sappington@morganstanley.com 31

33 Dean A. Boughner Wealth Management Associate The Cresfort Investment Group at Morgan Stanley Began career in the investment industry in 1985 Joined Cresfort in 2014 Responsible for marketing, administrative duties and internal operations for Cresfort team Provides client services to Morgan Stanley Portfolio Managers, Financial Advisors and support staff Previous position within Morgan Stanley as a Senior Registered Client Service associate within an FA team Prior experience in Operations, Management and Sales Holds FINRA Series 7, 63 & 65 licenses Address: West Catawba Avenue Suite 300 Cornelius, NC Tel. No.: (704) Fax. No.: (704) dean.boughner@morganstanley.com 32

34 Important Information This material is intended for use only in Morgan Stanley Smith Barney s Advisory Program. Portfolio Management is an advisory program in which the client's Financial Advisor invests the client's assets on a discretionary basis in a wide range of securities. Interest in municipal bonds is generally exempt from federal income tax. However, some bonds may be subject to the alternative minimum tax (AMT). Typically, state tax exemption applies if securities are issued within one s state of residence and, local tax exemption typically applies if securities are issued within one s city of residence. Bonds are affected by a number of risks, including fluctuations in interest rates, credit risk and prepayment risk. In general, as prevailing interest rates rise, fixed income securities prices will fall. Bonds face credit risk if a decline in an issuer's credit rating, or creditworthiness, causes a bond's price to decline. Finally, bonds can be subject to prepayment risk. When interest rates fall, an issuer may choose to borrow money at a lower interest rate, while paying off its previously issued bonds. As a consequence, underlying bonds will lose the interest payments from the investment and will be forced to reinvest in a market where prevailing interest rates are lower than when the initial investment was made. NOTE: High yield bonds are subject to additional risks such as increased risk of default and greater volatility because of the lower credit quality of the issues. Common stocks generally provide an opportunity for more capital appreciation than fixed income investments but are also subject to greater market fluctuations. Tax laws are complex and subject to change. Morgan Stanley Smith Barney LLC, its affiliates and Morgan Stanley Smith Barney Financial Advisors do not provide tax or legal advice. This material was not intended or written to be used for the purpose of avoiding tax penalties that may be imposed on the taxpayer. Individuals are urged to consult their personal tax or legal advisors to understand the tax and related consequences of any actions or investments described herein. Morgan Stanley Smith Barney LLC. Member SIPC. Investment Products: Not FDIC Insured No Bank Guarantee May Lose Value 33

35 Important Information This material is intended only for clients and prospective clients of the Portfolio Management program. It has been prepared solely for informational purposes only and is not an offer to buy or sell or a solicitation of any offer to buy or sell any security or other financial instrument, or to participate in any trading strategy. The individuals mentioned as the Portfolio Management Team are Financial Advisors with Morgan Stanley participating in the Morgan Stanley Portfolio Management program. The Portfolio Management program is an investment advisory program in which the client s Financial Advisor invests the client s assets on a discretionary basis in a range of securities. The Portfolio Management program is described in the applicable Morgan Stanley ADV Part 2, available at or from your Financial Advisor. Past performance of any security is not a guarantee of future performance. There is no guarantee that this investment strategy will work under all market conditions. Investment Products: Not FDIC Insured No Bank Guarantee May Lose Value 34