Summary

An actively managed approach relying on fundamental research and analysis to capture the benefits of both high-dividend yield and dividend growth stocks.

Objective*

Seeks to outperform the Russell 1000 Value Index by 1.5-3% annualized before management fees over full market cycles with an expected annualized tracking error of 3-6%.

Investment Process

Our disciplined, bottom-up investment process focuses on high-conviction stock selection. The process begins with identifying a universe of high-quality stocks with sustainable dividend yields. The initial investable universe consists of all stocks within the U.S. large cap universe. The universe is filtered to dividend-paying stocks, which are then evaluated for their ability to sustain dividend payments using our yield-at-risk model that evaluates critical factors such as a company’s financial strength and dividend coverage ratios, and eliminates the lowest quality stocks within each sector. Stocks that deemed unable to sustain their dividend commitments are excluded from the universe. The result is a target universe of high-quality stocks with sustainable high-dividend yields. Next, the target universe is ranked using proprietary multi-factor sector models. This allows our analysts to concentrate their efforts on the highest ranked stocks within their respective sectors while finding their highest conviction ideas through in-depth fundamental research and analysis. Portfolio construction is based on the attractiveness of each stock, given benchmark weight, expected return, perceived risk, and liquidity. Gross yield of the portfolio will always be at or above the yield of the Russell 1000 Value Index.