• It’s harder to expand profit margins today; companies that are able to deliver revenue growth are likely to reward investors.
• An index can overlook firms with high revenue growth, which can boost earnings.
• Emphasizing the highest-quality companies can lead to long-term, consistent earnings growth.

JAMES TIERNEY | CIO—Concentrated US Growth

CONCENTRATED EquitY PORTFOLIOS

QUALITY OVER QUANTITY

• There’s a strong case for emphasizing the quality, not the quantity, of stocks in building equity portfolios.
• “Concentrated” active managers have successfully delivered outperformance and strong risk-adjusted returns while reducing downside risk.

• Developing-world assets are tempting investors after five tough years, underpinned by attractive valuations and improving fundamentals.
• As a recovery unfolds, flexible, unconstrained approaches can point the way to firms whose potential transcends economic challenges.
• Emerging-market opportunities today span the asset classes—from equities and fixed income to currencies.

RE-EMERGING MARKETS: INVESTING IN A DEVELOPING RECOVERY

• Capture the exciting opportunities across emerging markets with highly selective approaches that aren’t tied to benchmarks.

AFTER THE BETA TRADE

• Seeking higher return potential, reducing volatility and lowering correlations with developed-market stocks are the key ingredients to generating alpha in emerging markets.

• Soaring stock prices thrill investors, but it’s the efforts to not lose money that build wealth over time.
• Portfolios focused on losing less in downturns than they gain in rallies have outperformed the market over full cycles.
• A smoother ride is easier on the nerves, helping investors to stay the course in equities to reach their long-term goals.

The Upside of Less Downside: How Defense Wins in Equities

• Strategies focused on downside-risk protection benefit from a simple math: stocks that fall less in market downturns have less ground to regain when the market recovers—and are better positioned to compound off of those higher returns in subsequent rallies. Over time, this gentler return pattern can end up ahead of the market.
• Lower expected stock returns in the years ahead have institutional investors asking: what do we need to do to enhance our core equity allocation? Active, high-conviction strategies that focus on stock picking could be the answer.