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HomeMy WebLinkAboutHandouts_Pension Public Safety_Tab 05_05/03/2010 Domestic Equity Strategies Overview r iil - �� i I IA i i „,_0_______t l i Presented May 3 2010 i iii ) THE BOGDAHN -at' GROUP W W W. B O G D A H N G R O U P. C O M simplify your investment and frdnciar y decisions Al AN 0 (IT "16 . 3 1 S - 3 - /0 C u A-re, 7 iQ,Ly »e - r - 1 v j .474 -tki n a - 77 - -r -g-Ai Domestic Equity Strategies Overview Active / Passive ❑ Active Investing — An investment strategy that utilizes trading activity of securities in a portfolio in efforts to add value and take advantage of profitable conditions. Active investors often set out to outperform a designated index or asset class, and add superior returns through this trading activity. ❑ Passive Investing — An investment strategy that involves very limited trading of securities within a portfolio. Passive investors may use index funds to provide the returns of a designated index or broad exposure to an asset class. 1 ■ Domestic Equity Strategies Overview Equity Investing Styles ❑ Growth— An investment style for selecting stocks characterized by an investor seeking to identify stocks with above - average growth of sales and earnings. Often these stocks may be characterized with "expensive" ratios including price -to- earnings and price -to -book valuations. ❑ Value— An investment style for selecting stocks where an investor places emphasis on identifying and selecting stocks that are underpriced in the market. Often these stocks are characterized by low price -to- earnings and price -to -book ratios compared to the marketplace. ❑ Other— GARP, Deep Value, Income Value, High Quality Growth 2 l � Domestic Equity Strategies Overview Market Capitalization Market Capitalization- A calculation of the number of outstanding shares of stock of a company multiplied by the share price of that stock, this calculation is used by investors to indicate the size of a company. The size of a companies market capitalization can be used to segment the company into one of this commonly used categories: Large Cap Over $10 Billion Mid Cap $3 Billion - $10 Billion Small Cap $250 Million - $3 Billion Others: All -Cap, Micro Cap, Nano Cap, Mega Cap, etc. 3 !�'� Domestic Equity Strategies Overview N. Equity Investing Approaches = -- - _ v„, Below are examples of types of investment strategic approaches that may be used by managers to attempt to identify profitable securities and market conditions: Cl Momentum— An investment strategy based upon buying stocks as they are rising, in hopes they will continue higher. This strategy is similarly referred to as theme based investing. ❑ Contrarian— An investment strategy that seeks to identify profitable situations by identifying and then speculating against the movements of securities. This strategy focuses on investing against themes in the marketplace. ❑ Quantitative — An investment management philosophy that places significant or total emphasis on empirical data (i.e. statistics and ratios) of securities to develop models, theories, or hypothesis in making buy and sell decisions. Cl Fundamental— An investment management philosophy that focuses on evaluating securities through a review of all factors including quantitative and qualitative factors and macro and micro economics to derive buy and sell decisions. 4 Q-*/� Domestic Equity Strategies Overview Investment Manager Strategy Managing the Style and Capitalization Allocation Boxes Example: Large Cap Value Large Cap Growth Sole Manager Large Cap Core Mid Cap Value Mid Cap Core Mid Cap Growth Small Cap Value Small Cap Core Small Cap Growth 41••■ 5 Domestic Equity Strategies Overview Investment Manager Strategy Managing the Style and Capitalization Allocation Boxes Example: • Large Cap Value Large Cap Growth Growth and Value Managers Mid Cap Value ° - - : = _ Cip CO rt Mid Cap Growth • Small Cap Value Small Cap Core Small Cap Growth Q7 .. , Domestic Equity Strategies Overview Investment Manager Strategy Managing the Style and Capitalization Allocation Boxes Example: • Large Cap Value Large Cap Growth Satellite /Opportunistic and Core Managers = E Mid Cap Value Mid Cap - °'d Cap Growth Small Cap Value Small Cap Core Small Cap Growth O I\ r. 1,"