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An Introduction toStandard & Poor’sBringing analytical rigor, objectivity and integrity to your portfolio
Today’s Agenda
• Who is Standard & Poor’s (S&P)?
• Standard & Poor’s History and Milestones
• Why I Use Standard & Poor’s– Transparency and independence– Experienced and insightful research staff– Rigorous research process
• How S&P Can Add Value to Your Portfolio
3.
Who is Standard & Poor’s?
• Standard & Poor’s (S&P) was founded in 1860 by Henry Varnum Poor based on the tenet:
“Every Investor’s Right To Know”
• World’s foremost provider of: – Independent credit ratings (bonds)– Indexes like the S&P 500 – Investment research (stocks, bonds, ETFs)
• Portfolio analysis through Standard & Poor’s Investment Advisory Services, LLC (SPIAS)
• 6,500 employees located in 22 countries
• A division of The McGraw-Hill Companies (NYSE:MHP)
4.
Standard & Poor’s History
Important Milestones
1860
Henry Varnum Poor Publishes “History
Of Railroads…”
1867
Poor’s Publishing created
1929
6 months prior to crash, Standard
Statistics & Poor’s Publishing Advise
Investors to Liquidate
1932
Poor’s Publishingmerges with
Standard Statistics.S&P is born.
19571941 1966
McGraw-Hillacquires
Standard &Poor’s
19761995
SPIAS establishedto provide
advice to financial community
2004
Stock Reports introduced
S&P 500 Index introduced
Expansion outsideU.S. begins
SPIAS introduces first asset
mgmt. program
5.
Why I Use Standard & Poor’s
Market Transparency
• S&P research process clearly and openly communicated
• Provider of regular investment, economic and market commentaries
Objectivity and Independence
• S&P has no investment underwriting or securities distribution activities
• S&P analysts do not own stocks they cover
• Independent investment research provider of choice
6.
Why I Use Standard & Poor’s
Experienced and Insightful Investment Staff (Qualitative)
*6 S&P analysts awarded “Best on the Street” in 2005 by The Wall Street Journal.
Team NumberAverage Years
Market Experience
Investment Policy Committee 10 21
Equity Analysts* 100 9
Fund Analysts 45 15
Portfolio Analysts 7 20
Economists 3 15
Index Analysts 20 5
7.
Why I Use Standard & Poor’s
Rigorous Research Processes: Stocks
• STARS buy-hold-sell recommendations (since 1986)
• Quality Rankings
• Fair Value
8.
Why I Use Standard & Poor’s
The STARS model performance graph is only an illustration of S&P’s research: it shows how stocks that received particular STARS rankings performed. This performance is not a result of investment advisory activities of Standard & Poor’s Investment Advisory Services LLC (SPIAS). The performance of these stocks does not show how any model portfolio has performed. The STARS rankings are only one piece of information SPIAS utilizes when selecting stocks for stock baskets. Stock recommendations will not be made solely on STARS rankings, nor will investors be able to invest in all of the stocks that receive a particular STARS ranking through the program.
STARS model performance does not represent the results of actual trading of investor assets. Thus, the model performance shown does not reflect the impact that material economic and market factors might have had on decision-making if actual investor money had been managed. While model performance for five, four and three STARS performed better than the S&P 500 for the period shown, the performance during any shorter or longer period may not have. STARS does not take into account any particular investment objective, financial situation or need and is not intended as an investment recommendation or strategy. Investments based on the STARS methodology may loose money.
The model performance calculation for STARS does not take into account reinvestment of dividends. It also does not take into account capital gains taxes, brokers' commissions and investment advisory fees. The imposition of these fees and charges would cause actual performance to be lower than the model performance shown. Past STARS model performance is no guarantee of future performance.
The Standard & Poor’s 500 index is unmanaged and includes a different number of holdings, has different risk characteristics than the STARS stocks, and does not reflect expenses and fees or takes into consideration the reinvestment of dividends. It is not possible to invest in an index. Past performance of the index is no guarantee of future performance.
Analytic services and products provided by Standard & Poor’s are the result of separate activities designed to preserve the independence and objectivity of each analytic process. Standard & Poor’s has established policies and procedures to maintain the confidentiality of non-public information received during each analytic process.
9.
Why I Use Standard & Poor’s
Rigorous Research Processes: StocksSTARS Cumulative Performance
December 1986 - December 2005
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
86 87 88 89 90 91 92 93 94 95 96 97 98 99 '00 '01 '02 '03 '04 '05
1 STARS 2 STARS 3 STARS 4 STARS 5 STARS S&P 500 INDEX
Grow th of $100invested on
12/31/86 w ould be w orth on 12/31/05
5 STARS = $17884 STARS = $8913 STARS = $640S&P 500 = $5152 STARS = $4131 STARS = $112
Average Annual Performance
12-31-86 to 12-31-05
5 STARS = +16.4%4 STARS = +12.2%3 STARS = +10.3%S&P 500 = +9.0%2 STARS = +7.8%1 STARS = +0.6%
10.
8,000Domestic
Mutual Funds
Why I Use Standard & Poor’s
Performance Consistency
Rigorous Research Processes: Mutual Funds
Best of Breed Funds
ManagerInterviews
SecondaryResearch
11.
Why I Use Standard & Poor’s
150ETFs
Structure
Rigorous Research Process: ETFs
Best of Breed ETFs
Liquidity Cost
12.
How S&P Can Add Value To Your Portfolio
What does this mean to you? It means a portfolio built on….
• 140 years of experience
• “Every Investor’s Right to Know”
• Independent and unbiased investment research and analysis
• A deep bench of investment analysts from which to draw
• In-depth coverage and analysis on more than 1,500 domestic stocks
• In-depth analysis on approximately 8,000 funds
• Rigorous research processes that are transparent and independent
13.
Questions & Answers
?
Copyright © 2005 by The McGraw-Hill Companies, Inc. Redistribution, reproduction and/or photocopying in whole or in part is prohibited without written permission “Standard & Poor’s” and "STARS" are trademarks of The. All rights reserved. “S&P”, “S&P 500”, McGraw-Hill Companies, Inc. The information in this slide presentation is not investment advice. Analytic services and products provided by Standard & Poor’s are the result of separate activities designed to preserve the independence and objectivity of each analytic process. Standard & Poor’s has established policies and procedures to maintain the confidentiality of non-public information received during each analytic process.
SP3-0106