Portfolio Managers

65/35 Allocation

Benchmarks

The performance goal of every portfolio manager is to maintain an average rate of return that exceeds the appropriate benchmark for their asset class adjusted for all investment costs and fees. The benchmarks are:

Manager Information

Neuberger Berman (Large Cap Growth)

Portfolio Construction

• The Neuberger Berman LCG team looks for accelerating growth in the company's key metrics, and requires the presence of a catalyst to invest.

• The portfolio tends to have a larger market capitalization bias, something many other growth managers shy away from.

• The portfolio typically has around 60 securities in a broad spectrum of sectors and industries, and runs a turnover around 100%.

Delaware Investment Advisors (Large Cap Growth)

Portfolio Construction

• The level of conviction derived from Delaware’s research drives the weight of securities within the portfolio.  Delaware looks for companies with strong return on invested capital.

• A new security is typically brought into the portfolio at 2% unless there is significant conviction in the name and then could be brought into the portfolio at a higher weight.

• A single position cannot be greater than 10% of the portfolio.

• The final portfolio contains 30 – 40 large cap growth companies.

LSV  (Large Cap Value)

Portfolio Construction

• LSV uses a strictly quantitative investment model to choose out-of-favor (undervalued) stocks in the marketplace at the time of purchase and have potential for near-term appreciation. 

• LSV believes that these out-of-favor securities will produce superior future returns if their future growth exceeds the market's low expectations.

• LSV portfolios typically have a deep vale orientation relative to the indices.  Market timing is not part of the process. The final portfolio contains 125-175 large cap names.

Martingale asset management (Large Cap Value)

Portfolio Construction

• Well diversified portfolio generally including 60-80 names.

• The portfolio risk is controlled relative to the benchmark by explicitly managing the relative exposure of industry bets, risks, indices, and beta constraints.

• Portfolio generally has a small positive exposure to momentum and earning yields.

Analytic Investors, Inc.  (Large Cap Core)

Portfolio Construction

• Analytic applies a “benchmark oriented” strategy designed to add value through stock selection.  The portfolio will hold anywhere from 75-150 securities.

• Analytic uses a proprietary multi factor model to determine rational valuations for all US large cap securities and then uses this information to apply a series of small over and under weights versus the index to add value.

• Analytic’s philosophy is that no one stock should significantly impact the performance of the portfolio.  This approach results in “+ or – 0.5% of benchmark" rule for high volatility stocks and a "+ or -3% of benchmark" rule for low volatility stocks.

Quantitative Management Associates (Large Cap Core)

Portfolio Construction

• Portfolios are constructed using an internally developed optimizer to maximize expected return.  The optimizer incorporates individual stock risks combined with targeted tracking and relative benchmark constraints.

• Each securities active weighting is no more than + or – 75 basis points.

• The portfolio is rebalanced every two weeks.

Advanced investment partners (Small Cap Core)

*Info not supplied by manager

Portfolio Construction

• A portfolio holds roughly between 125 and 150 stocks with individual security positions ranging from 0.5% to market weight plus 1.5%.

• Stocks are evaluated and scored using four independent analyses: broad universe, style specific, sector specific and stock specific.

• Stocks are included in the portfolio not only for their expected return, but for their contribution to the portfolio's risk profile.  Stocks whose relative attractiveness ranks in the top (bottom) 20% are considered strong buy (sell) candidates.

McKinley Capital Management Inc. (Small Cap Growth)

Portfolio Construction

• New positions in the portfolio are added at weights of 1% to 2%.  At that point, the firm allows weights to move up or down without rebalancing until the sell discipline is met or if adjustments are required due to risk controls.

• The firm follows maximum guidelines per sector, industry and issue for risk control and diversification.

• McKinley is sensitive to the larger sector exposures in the benchmark, which historically have been technology, health care and consumer discretionary in the growth benchmarks.

Lee Munder Investments Ltd. (Small Cap Value)

Portfolio Construction

• The investment philosophy focuses on dominant companies within their industry niches that are temporarily out of favor in the market due to transitory events.

• The process employs considerable fundamental analysis, is flexible enough for experienced investors to exercise judgment, has a practical valuation discipline and exhibits solid risk controls.

• The process also aims for consistency of stock selection through modest positions in successful investments and does not expose itself to the highs and lows of outsized single stock returns.

Acadian (Non-U.S. Equity)

Portfolio Construction

• Acadian uses their structured stock and peer group valuation models to capture a broad range of characteristics such as valuation, earnings potential, financial quality and price movement.  Acadian has a top-down element to their forecasting process that will actively over and underweight various industries.

• Acadian's proprietary methodology combines the factor data and determines a return forecast for each stock, which they use to run in their portfolio optimization system.  The investment team carefully reviews the optimized portfolio to ensure that it meets all the investment goals and guidelines.

• Industry and country weightings are dictated by the stock exposures and can significantly deviate from the benchmark.  The result is a concentrated portfolio with 20-35 stocks.

Quantitative Management Associates (Non-U.S. Equity)

*Info not supplied by manager

Portfolio Construction

• QMA categorizes a universe of 1000 MSCI EAFE securities by growth rates.  A customized valuation criterion for each category is applied to calculate an expected return for each stock.

• The portfolio is constructed using a proprietary optimization program.  The optimizer seeks to control risks while maintaining the insights of their alpha estimates.

McDonnell Investment Management, LLC (Core Fixed Income)

Portfolio Construction

• Portfolio managers concentrate on managing the duration or interest rate sensitivity of the portfolio, while avoiding making projections of future interest rates.  The portfolio’s reinvestment and market risk are controlled far more effectively than by ‘laddering’ a portfolio.

• As the portfolio shortens, the investment team identifies sale candidates keeping inline with the goal to balance quantitative relative value measures with McDonnell’s credit process.

• To add value to the portfolio, McDonnell emphasizes rotation among various fixed income sector based on relative value and expected total return.  Once a sector becomes overvalued based on current and historical trading relationships, the portfolio will rotate to sectors offering better expected total returns.