Equity Portfolio Management

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Equity Portfolio Management
Amit KhandwalaWright Investors ServiceSenior
Vice President - International Equity Management
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Investment Philosophy

• We Believe
• Investment behavior creates opportunities that
  passive management does not fully capture
• A systematic disciplined investment process
  incorporating both quantitative and qualitative
  elements identifies companies with above average
  return potential

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Investment Process A Disciplined Approach
Appropriate Style Universe
Quantitative Analysis
Capture Quality Ratings and Fundamental Ratios
Portfolio Optimization
Qualitative Analysis
Price Momentum / Earnings Outlook /Exogenous
Factors
Portfolio MonitoringRe-optimization Sell
Disciplines
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Quantitative Ranking Model

1. Proprietary Quality Rating 32 specific standards
   in four categories including liquidity,
   financial strength, profitability and growth
2. Earned Return A measure of return to investors
3. Valuation-Adjusted Earned Return Historic R.O.I.
   adjusted for current valuation
4. Earnings Momentum Combines Wrights historic
   earnings measures and projected consensus
   earnings

Factor weightings are dynamic and are regularly
reviewed to validate predictive strength.
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Quality Rating
32 SCREENS OF THE WRIGHT QUALITY RATINGS
QUALITY RATING 28,000 names are screened through
a proprietary process to assign a quality rating
INVESTMENT ACCEPTANCE FINANCIAL STRENGTH
PROFITABILITY STABILITY GROWTH INVESTMENT
QUALITY
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Quantitative Ranking Model

1. Proprietary Quality Rating 32 specific standards
   in four categories including liquidity,
   financial strength, profitability and growth
2. Earned Return A measure of return to investors
3. Valuation-Adjusted Earned Return Historic R.O.I.
   adjusted for current valuation
4. Earnings Momentum Combines Wrights historic
   earnings measures and projected consensus
   earnings

Factor weightings are dynamic and are regularly
reviewed to validate predictive strength.
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Qualitative Analysis Porters Five Forces
Threat of new entrants
Bargaining power of buyers
Bargaining power of suppliers
Rivalry among existing firms
Availability of substitutes
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Sector/Country Allocation

• Economic outlook
• Political environment
• Regulatory issues

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Portfolio Construction

• Portfolio optimizer seeks to minimize benchmark
  variance
• Portfolios are monitored constantly and
  re-balanced periodically

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Summary
Q U A N T I T A T I V E
Quality Rankings Ranking Model Optimization
Q U A L I T A T I V E
Porters Five Forces Market trends Technical
trends Exogenous Factors
F I N A L P O R T F O L I O
P O R T F O L I OR E V I E W
Sell Discipline
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• Questions