EQUITY
Fixed Income

Aristotle Capital Management
Global Equity

Strategy Overview

The Global Equity strategy applies a fundamental, bottom-up stock selection process to a universe of companies with market capitalizations typically in excess of $2 billion at initial investment. The portfolio holds investments of what we believe to be high-quality businesses trading at meaningful discounts to our estimate of intrinsic value. The strategy invests in companies around the world, utilizing both American Depository Receipts (ADRs) and foreign ordinary shares.

The objective of the Global Equity strategy is to achieve attractive long-term risk-adjusted returns versus the MSCI World Index (Net). Given the ability to invest in emerging markets, we encourage our clients to also consider our returns as compared to the MSCI ACWI (Net) Index as an illustrative secondary benchmark.

Global Equity Overview

Benchmarks: MSCI World Index (Net); MSCI ACWI Index (Net)

Minimum Market Cap: Typically $2 billion at initial purchase

Country Weights: Typically less than 35%, except U.S.

Position Size: Maximum position size 6% of portfolio market value

Cash: Typically less than 5%

Vehicles Offered: Separate Account, Mutual Fund, Collective Investment Trust

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Aristotle Capital Management
International Equity

Strategy Overview

The International Equity strategy applies a fundamental, bottom-up security selection process to a universe of companies primarily domiciled outside of the United States and with market capitalizations typically in excess of $2 billion. The strategy may own foreign ordinary shares as well as American Depository Receipts (ADRs). Emerging market exposure is limited to 20% of the portfolio market value.

The objective of the International Equity strategy is to optimize long-term performance relative to the MSCI EAFE Index (Net) while providing adequate downside protection. Given the ability to invest in Canada and the emerging markets (up to 20%), we encourage our clients to also consider our returns as compared to the MSCI ACWI ex USA (Net) Index. Our investment process is based on fundamental, bottom-up research analysis and does not have explicit risk and return objectives.

International Equity Overview

Benchmarks: MSCI EAFE Index (Net); MSCI ACWI ex USA Index (Net)

Minimum Market Cap: Typically $2 billion at initial purchase

Sector Weights: Within 50%-200% of MSCI EAFE Index major sector weights

Country Weights: Within 50%-200% of MSCI EAFE Index major country weights; Maximum 20% allocated to emerging markets

Position Size: Maximum position size 6% of portfolio market value

Cash: Typically less than 5%

Vehicles Offered: Separate Account; Mutual Fund; Collective Investment Trust

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Aristotle Capital Management
Value Equity (U.S.)

Strategy Overview

The Value Equity strategy applies a fundamental, bottom-up security selection process to a universe of companies with market capitalizations in excess of $2 billion at initial investment. The portfolio holds investments in what we believe to be high-quality businesses trading at meaningful discounts to our estimate of intrinsic value.  The strategy invests mainly in U.S.-based companies but may invest up to 20% in companies based outside the United States (in the form of ADRs).

The objective of the Value Equity strategy is to achieve attractive long-term risk-adjusted returns versus the Russell 1000 Value and S&P 500 indices. 

Value Equity Overview

Benchmarks: Russell 1000 Value Index; S&P 500 Index

Minimum Market Cap: Typically $2 billion at initial purchase

Sector Weights: Within 50%-200% of S&P 500 Index major sector weights

Country Weights: Maximum 20% in companies headquartered outside the U.S. (ADRs)

Position Size: Maximum position size 6% of portfolio market value

Cash: Typically less than 5%

Vehicles Offered: Separate Account; Mutual Fund; Collective Investment Trust

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Aristotle Credit Partners
High Yield Bond

Strategy Overview

The High Yield Bond strategy seeks to provide strong risk-adjusted returns relative to the ICE BofA BB-B U.S. Cash Pay High Yield Constrained Index with lower return volatility than the benchmark over a full market cycle. The strategy seeks to optimize long-term returns with a focus on mitigating market risk through a combination of high current income and capital appreciation.

Investments are focused on the upper two tiers of the high yield market as we believe these credits generally possess more favorable risk-reward profiles compared to other high yield bonds. We seek credits with strong fundamentals, ample cash flow, solid capital structures and low default risk.

High Yield Bond Overview

Benchmark: ICE BofA BB-B U.S. Cash Pay High Yield Constrained Index

Cash: Maximum 5%

Minimum Issue Size: $150M Original Issuance

Maximum Issue Holding: 10% of Original Issuance

Maximum Industry Allocation: 30.0%

Portfolio Minimum Average Quality: B2

Minimum Security Rating: B/CCC

Issuer Max: BB: 4%; B: 3%; B/CCC: 2%

Maximum Allocation to Split B/CCC: 5%

Duration: Typically +/- 25% of Index

Investment Grade Securities: Up to 25%

Maximum Allocation to Emerging Markets: 25%

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Aristotle Credit Partners
Short Duration High Yield Bond

Strategy Overview

The Short Duration High Yield Bond strategy seeks to provide strong risk-adjusted returns relative to the ICE BofA 1-3 Year BB-B U.S. Cash Pay Fixed Maturity High Yield Constrained Index with lower return volatility than the benchmark over a full market cycle. The strategy seeks to optimize long-term returns with a focus on mitigating market risk through a combination of high current income and capital appreciation.

Investments are focused on the upper two tiers of the high yield market as we believe these credits generally possess more favorable risk-reward profiles compared to other high yield bonds. We seek credits with strong fundamentals, ample cash flow, solid capital structures and low default risk. Investments are focused on credits with a final maturity of four years or less.

Short Duration High Yield Bond Overview

Benchmark: ICE BofA 1-3 Year BB-B U.S. Cash Pay Fixed Maturity High Yield Constrained Index

Cash: Maximum 5%

Minimum Issue Size: $150M Original Issuance

Maximum Issue Holding: 10% of Original Issuance

Maximum Industry Allocation: 30% Issuance

Maturity Constraints: Maximum 4-year final maturity

Portfolio Minimum Average Quality: B2

Minimum Security Rating: B/CCC

Issuer Max: BB: 4%; B: 3%; B/CCC: 2%

Maximum Allocation to Split B/CCC: 5%

Duration: +/- 25% of Index

Investment Grade Securities: Up to 25%

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Aristotle Credit Partners
Investment Grade Corporate Bond

Strategy Overview

The Investment Grade Corporate Bond strategy seeks to outperform the total return of the Bloomberg U.S. Corporate Bond Index while actively managing portfolio risk. The strategy seeks to optimize long-term returns with a focus on mitigating market risk through a combination of high current income and capital appreciation.

Investments are focused on the “A” and “BBB” tiers of the investment grade corporate market as we believe these credits generally possess more favorable risk/reward profiles compared to other credits in the sector. We seek credits with strong fundamentals, ample cash flow, solid capital structures and stable or improving financial profiles.

Investment Grade Corporate Bond Overview

Benchmark: Bloomberg U.S. Corporate Bond Index

Cash: Maximum 5%

Minimum Issue Size: $150M Original Issuance

Maximum Issue Holding: 10% of Original Issuance

Maximum Industry Allocation: 35%

Portfolio Minimum Average Quality: BBB

Minimum Security Rating: BBB/BB

Issuer Max: BBB/BB: 15%

Maximum Allocation to Split BBB/BB: 15%

Duration: +/- 25% of Index

High Yield Securities: Up to 15%

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Aristotle Credit Partners
Strategic Credit

Strategy Overview

The Strategic Credit strategy seeks to outperform the total return of a blended benchmark* at a lower overall portfolio risk level using a diversified portfolio of high yield bonds, bank loans and investment grade corporate bonds. We believe the strategy’s multisector approach, diversified nature and wide opportunity set can allow for substantial yield with only modest duration compared to other fixed income strategies.

Investments target the upper two tiers of the high yield and bank loan markets and the “A” and “BBB” tiers of the investment grade corporate market. Portfolio managers have flexibility to position the strategy for various credit and interest rate environments by rotating among high yield bonds, bank loans and investment grade corporates. The potential investment strategies and alpha sources may include issuer and industry selection, sector rotation, yield curve positioning and capital structure decisions.

Strategic Credit Overview

Benchmark: Blended Benchmark*

Cash: Maximum 5%

Minimum Issue Size: $150M Original Issuance

Maximum Issue Holding: 10% of Original Issuance

Maximum Industry Allocation: 30%

Portfolio Minimum Average Quality: BBB

Minimum Security Rating: B/CCC

Issuer Max: BB: 4%; B: 3%; B/CCC: 2%

Maximum Allocation to Split B/CCC: 5%

Duration: +/- 25% of Index

*Blended Benchmark represents a blend of the 1/3 Bloomberg U.S. High Yield Ba/B 2% Issuer Capped Bond Index, 1/3 Bloomberg U.S. Intermediate Corporate Bond Index and 1/3 Credit Suisse Leveraged Loan Index. The Bloomberg U.S. High Yield Loans Index was retired on September 30, 2016 and was replaced with the Credit Suisse Leveraged Loan Index effective October 1, 2016.

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Aristotle Capital Boston
Small Cap Equity

Strategy Overview

The investment objective of the Small Cap Equity strategy is to maximize long-term capital appreciation while mitigating risk relative to the benchmark over multi-year periods. Through a fundamental, bottom-up research effort, the team seeks to identify businesses they believe possess quality management teams, attractive industry dynamics, strong or improving financials, and attractive upside potential and limited downside risk.

The firm believes it can generate alpha over the long term by exploiting business valuation opportunities as they are identified in the marketplace, creating long-term value driven by security selection. While there is no formal tracking error target for the strategy, it has historically ranged between 3% and 5%, annualized.

Small Cap Equity Overview

Benchmark: Russell 2000 Index

Market Cap Range: Within the Russell 2000 Index at time of purchase

Sector Weights: +/- 10% of benchmark weight (on an absolute basis)

Cash: Typically less than 5%

Individual Position Size: Maximum of 5% (typically trimmed as they exceed 2.5%)

Annual Turnover: Typically 20% – 30%

Vehicles Offered: Separate Account, Mutual Fund, Collective Investment Trust

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Aristotle Capital Boston
Small/Mid Cap Equity

Strategy Overview

The investment objective of the Small/Mid Cap Equity strategy is to maximize long-term capital appreciation while mitigating risk relative to the benchmark over multi-year periods. Through a fundamental, bottom-up research effort, the team seeks to identify businesses they believe possess quality management teams, attractive industry dynamics, strong or improving financials, and attractive upside potential and limited downside risk.

The firm believes it can generate alpha over the long term by exploiting business valuation opportunities as they are identified in the marketplace, creating long-term value driven by security selection. While there is no formal tracking error target for the strategy, it has historically ranged between 3% and 5%, annualized.

Small/Mid Cap Equity Overview

Benchmark: Russell 2500 Index

Market Cap Range: Within the Russell 2500 Index at the time of purchase

Sector Weights: +/- 10% of benchmark weight (on an absolute basis)

Individual Position Size: Maximum of 5% (typically trimmed as they exceed 2.5%)

Cash: Typically less than 5%

Annual Turnover: Typically 20% – 30%

Vehicles Offered: Separate Account, Collective Investment Trust

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Aristotle Atlantic Partners
Large Cap Growth

Strategy Overview

The Large Cap Growth strategy applies a fundamental, bottom-up security selection process to a universe of companies with market capitalizations in excess of $2 billion at initial investment. Aristotle Atlantic seeks to buy companies that can benefit from strong product cycles, positive secular themes or cyclical trends, all of which are continually reviewed and updated by the investment team. The portfolio is constructed of 45 to 60 companies. In-depth, company-specific research is conducted by the analysts to identify what they believe to be high-quality, large cap companies that could benefit from our investment pillars.

The objective of the Large Cap Growth strategy is to achieve attractive long‐term, risk‐adjusted returns versus the Russell 1000 Growth Index over a full business cycle. The tracking error is generally within a 2%-4% range with an above average information ratio.

Large Cap Growth Overview

Benchmark: Russell 1000 Growth Index

Market Cap Range: Over $2 billion at purchase

Sector Weights: 0%-200% of Index for sectors 1%-10%; 50%–150% of Index for sectors > 10%

Individual Position Size: Maximum 5% at cost (unless benchmark weight > 3%)

Cash: Maximum 10%; Average < 2%

Annual Turnover: Approximately 25% 

Vehicles Offered: Separate Account, Model Delivery

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