for use in one-on-one client presentations only. large capitalization growth socially responsible...
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For Use In One-On-One Client Presentations Only.
Large Capitalization GrowthSocially Responsible Investing Strategy
1st Quarter, 2013
Thomas B. Murphy, Ph.D., CFASenior Vice President
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Congress Asset Management
Privately owned, Boston based investment management company founded in 1985
‒ $7.67 billion in assets under management as of March 31, 2013‒ 50 employees spanning investment management, sales, operations and compliance‒ Investment Management is our only focus
Seasoned, stable investment management team comprised of 14 Portfolio Managers and 7 Analysts with little client or employee turnover
Firm wide commitment to integrity, performance and client services
Client base includes taxable and tax exempt accounts for both institutional and private clients
$2,653.7
$2,662.2
$785.5
$695.1
$558.5
$146.3
$114.0 $34.5
$30.0
Firm Overview
Marketplace Strength
We are a growth manager with a process and expertise centered on security selection
Our firm specializes in diversified portfolios for institutions and high net worth individuals, encompassing both equity and fixed income disciplines
Managing over $4.0 billion in tax exempt Taft-Hartley, Corporate, and Public Funds and $1.5 billion in Foundation & Endowments
Marketplace Distribution Assets Under Management
Data as of 3/31/13. 3
n Large Cap Growth
n Fixed Income
n Private Equity
n Balanced
n Mid Cap Growth
n Multi-Cap Growth
n All Cap Opportunity
n Dividend Growth
n Custom Equity
n Institutional
n Sub-Advisory
n Private Client53%
32%
15%
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Investment Framework
Congress Asset Management’s investment framework:
Philosophy
Process
People
Performance
Remain loyal to single investment philosophy Continually apply philosophy to product suite Philosophy proven creditable over various market cycles
Developed replicable process Congressional approach to investment decisions Process attested reliable throughout numerous markets cycles
Deep bench of experienced and seasoned investment professionals Independent thinkers in a collaborative work environment Low personnel turnover
Long term growth with a focus on lower volatility Target consistent performance throughout various market environments Security selection is the main driver of performance attribution
Congress Asset Socially Responsible Investing Background
Congress Asset Management has handled SRI mandates for over 20 years
Currently manage over $100M in Religious account assets as of 1/31/13 – Equity and Balanced
A sample of our current SRI clients include the following organizations:
Diocese of Scranton Sisters of St. Dorothy Ursuline Sisters of Western Province Francis House
We have the flexibility to design and implement or enforce your stated SRI guidelines
Customized portfolio from our current models and approved list of securities
Our SRI clients have a dedicated Portfolio Manager
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Investment Philosophy
We believe that long term superior stock performance is generated by companies consistently growing earnings and cash flow
Our firm’s team-based approach, investment depth and technical proficiency provides us a competitive advantage when analyzing potential investments
Bottom-up stock selection is the primary driver of excess returns
Identify attractive securities utilizing internally generated fundamental research focused on a company’s income statement, capital structure, and cash flow generation
Long term outlook with a focus on risk control
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Team Driven Investment Process
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Investment management decisions are made by our Investment Policy Committee which is comprised of portfolio managers and research staff:
An approved list of securities is created by evaluating publicly traded companies with a market cap ≥ $8 billion
A comprehensive portfolio construction process ensures risk control and maintains adherence to each client’s mandate.
The Investment Policy Committee structure and process benefits our clients:
Consistent, repeatable process over time
Broad range of experience of our investment professionals
Effective checks and balances over investment decisions
Risk Controlled Portfolio
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The result of our process is a high conviction portfolio:
Best Investment Ideas
35-45 equity holdings 2.5% initial commitment 5% maximum individual security weight 15% maximum exposure to a particular industry 30% maximum exposure to an individual sector
Fully invested
5% maximum cash allocation
Average cash allocation of 1 to 2%
Low turnover
25-50% Annually
*Diversification does not guarantee a profit or eliminate the risk of potential loss.
Sell Discipline
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Stocks may be sold for the following reasons:
Downside Protection: Fundamentals weaken resulting in disappointing financial results for multiple periods Company abruptly alters business plan Ability to recognize a mistake
Upside Protection: Valuation becomes unattractive relative to a stocks history and/or peers Positions are trimmed when holding reaches 5% of the market value of the portfolio Compelling replacement is identified
Performance
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Socially Responsible Large Cap Growth Portfolio Annualized Returns (%) As of 3/31/13
Source: CAM, Bloomberg Finance L.P., Russell Investments, Capital IQ , and PSN.This information is for illustrative purposes, is subject to change at any time and should not be considered investment advice or a recommendation to buy or sell any particular security. Individual portfolios may vary by client and there is no guarantee that a client’s account will hold any or all of the securities listed.. Past performance does not predict or guarantee future results.
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12
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Month to Date Quarter to Date 1 Year 3 Years 5 Years
n SRI - Large Cap Growth 2.84 8.03 7.56 12.57 6.22
n S&P 500 3.75 10.61 13.96 12.67 5.81
Active Portfolio Allocation
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Socially Responsible Large Cap Growth Portfolio Sector Allocation Ex-Cash(%) As of 3/31/13
Consumer Discretionary
Consumer Staples Energy Finance Health
Care Industrials Tech Materials Telecomm Utilities
SRI - Large Cap Growth 12.5 7.5 9.7 14.8 9.4 10.4 24.3 9.2 0.0 0.0
S&P 500 11.47 10.79 11.11 16.06 12.10 10.15 18.35 3.48 3.06 3.44
0%
5%
10%
15%
20%
25%
30%
Sources: CAM, Russell Investments, Bloomberg Finance L.P., Capital IQ, and PSN. This information is for illustrative purposes, is subject to change at any time and should not be considered investment advice or a recommendation to buy or sell any particular security. Past performance does not predict or guarantee future results. Please refer to the back of this presentation for additional important information.
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Socially Responsible Large Cap Growth Portfolio Model Portfolio Holdings as of 3/31/13
Source: CAM, Bloomberg Finance L.P., Russell Investments, Thomson Reuters and PSN.This information is for illustrative purposes, is subject to change at any time and should not be considered investment advice or a recommendation to buy or sell any particular security. Individual portfolios may vary by client and there is no guarantee that a client’s account will hold any or all of the securities listed.. Past performance does not predict or guarantee future results.
Equity Holdings
CONSUMER DISCRETIONARY FINANCIALS INFORMATION TECHNOLOGY
DOLLAR TREE INC AMERICAN TOWER CORP ACCENTURE PLC
HOME DEPOT INC BB&T CORP ADOBE SYSTEMS INC
PANERA BREAD CO PUBLIC STORAGE APPLE INC
TJX COMPANIES INC SCHWAB (CHARLES) CORP CITRIX SYSTEMS INC
VF CORP TRAVELERS COS INC EMC CORP/MASS
WELLS FARGO COMPANY GOOGLE INC-CL A
CONSUMER STAPLES INTL BUSINESS MACHINES CORP
CASEYS GENERAL STORES INC HEALTH CARE MICROSOFT CORP
COLGATE-PALMOLIVE CO CERNER CORP QUALCOMM INC
HAIN CELESTIAL GROUP INC EDWARDS LIFESCIENCES CORP EBAY INC
INTUITIVE SURGICAL INC
INDUSTRIALS THORATEC CORP MATERIALS
CANADIAN NATL RAILWAY CO FMC CORP
CATERPILLAR INC ENERGY MONSANTO CO
ROPER INDUSRIES INC NATIONAL OILWELL VARCO POTASH CORP OF SASKATCHEWAN
UNITED PARCEL SERVICE OCEANEERING INTERNATIONAL INC PRAXAIR INC
WABTEC CORP OIL STATES INTERNATIONAL
SCHLUMBERGER LTD
Socially Responsible Large Cap Growth Composite 1/1/04– 3/31/13
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* Composite contains 5 or fewer portfolios
Composite Characteristics: The Socially Responsible Large Cap Growth Composite was created on April 1, 2004. The inception date is January 1, 2004 and reflects the first full month in which an account was fully invested in the strategy and met the inclusion criteria. The composite includes all fully discretionary accounts with a value over $500 thousand (US dollars) managed in the socially responsible large cap growth style for a minimum of one consecutive months. Accounts with wrap commissions are excluded from the composite. Prior to September 1, 2005 the composite did not include taxable accounts, private client accounts, or accounts with less than $1 million. The composite benchmark is the S&P 500 Index. Closed account data is included in the composite as mandated by the standards in order to eliminate a survivorship bias. A complete list and description of all firm composites is available upon request.Calculation Methodology: Valuations and returns are computed and stated in U.S. dollars. The firm uses the Modified Dietz formula to calculate monthly returns and links these returns geometrically to produce an accurate time-weighted rate of return. The composite is also revalued intra-month in cases where cash flows in excess of 10% of the composite’s value occur. Composite returns are asset-weighted. Gross of fees returns are calculated gross of management and custodial fees and net of transaction costs. Prior to 2007 net of fees returns are calculated by reducing gross returns by the highest management fee in the Socially Responsible Large Cap Growth composite, which is 0.75%. Effective January 1, 2007 net of fees returns are calculated using actual management fees. The composite results portrayed reflect the reinvestment of dividends, capital gains, and other earnings when appropriate. Accruals for equity securities are included in calculations. A maximum of 5% of the portfolio may be invested in the ADR’s of foreign companies. The dispersion measure is the asset-weighted standard deviation of accounts in the composite for the entire year. The three-year annualized standard deviation measures the variability of the composite and the benchmark returns over the preceding 36-month period. The standard deviation is not presented for 2004 through 2010 as it is not required for periods prior to 2011. Prior to January 1, 1993 the composite is not in compliance with GIPS.Fee Schedule: The firms’ individual account fee schedule is as follows: 1.00% for first $1 million, 0.80% for next $4 million, 0.60% for next $5 million. Management fees for individual accounts with assets under management exceeding $10 million, and for institutional accounts are negotiated. The individual account fee schedule may be subject to negotiation where circumstances warrant. As fees are deducted quarterly, the compounding effect will increase the impact of the fees by an amount directly related to the gross account performance. For example, an account earning a 10% annual gross return with a 1% annual fee deducted quarterly would earn an 8.9% annual net return due to compounding.Other Disclosures: Policies for valuing portfolios, calculating performance, and preparing compliant presentations are available upon request. Past performance does not guarantee future results. This performance report should not be construed as a recommendation to purchase or sell any particular securities held in composite accounts. Market conditions can vary widely over time and can result in a loss of portfolio value. Total Firm Assets End of Period #: Number includes a portion of assets where Congress Asset Management Co. does not have full conditional trading authority. The assets consist of model portfolio relationships with third party platforms and totaled 10% of the firm’s assets as of 3/31/13. Year-end model portfolio totals were 0% in 2005, 0% in 2006, 1% in 2007, 2% in 2008, 4% in 2009, 4% in 2010 and 10% in 2011, respectively.
Congress Asset Management claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS standards. Congress Asset Management has been independently verified for the periods 12/31/95 – 6/30/12. The verification report is available upon request. Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm’s policies and procedures are designed to calculate and present performance in compliance with the GIPS standards. Verification does not ensure the accuracy of any specific composite presentation.
Firm Information: Congress Asset Management Co. (CAM) is an investment advisor registered with the Securities and Exchange Commission under the Investment Advisors Act of 1940. CAM manages large cap equity, mid cap equity, and fixed income investments for private and institutional clients. CAM acquired Prelude Asset Management LLC on March 15, 2010.
Year TotalReturnGross of Fees
%
Total Return Net ofFees %
S&P 500 Return %
(dividends reinvested)
CompositeGross 3-Yr St Dev (%)
S&P 500 3-Yr St
Dev (%)
Number of
Portfolios
GrossDispersion
%
TotalComposite
AssetsEnd ofPeriod
($ millions)
TotalFirm
Assets Endof Period #($ millions)
2004 13.2 12.3 10.9 * * 16 3,844
2005 5.0 4.2 4.9 10 0.63 24 4,751
2006 10.0 9.2 15.8 14 0.86 34 5,469
2007 13.4 12.8 5.5 14 0.76 27 5,846
2008 -33.8 -34.1 -37.0 5 1.23 6 4,371
2009 30.0 29.3 26.5 11 1.87 20 5,463
2010 13.3 12.8 15.1 10 0.99 21 6,678
2011 4.9 4.4 2.1 17.6 18.7 12 1.13 22 7,014
2012 13.5 12.9 16.0 15.6 15.1 11 0.44 24 7,498
For more information, please contact us at:2 Seaport Lane Boston, Massachusetts 02210-2001
617.737.1566 ▪ www.congressasset.com