Aristotle Capital Management
Value Equity (U.S.)

Strategy Overview

  • Fundamental, bottom‐up stock selection process applied to a universe of companies with market capitalizations in excess of $2 billion at initial investment
  • Focused strategy tends to be characterized by high active share and low turnover
  • Initial position size is typically 2.0%‐2.5%, with a maximum position size 6% of portfolio market value
  • Portfolio is composed mainly of U.S.‐based companies and may invest up to 20% in companies based outside the U.S. (ADRs)
  • Objective is to achieve attractive long-term returns versus the benchmarks while mitigating risk over a complete market cycle

 

All portfolio holdings must meet the following three criteria:

  • High Quality: Companies in great and/or improving lines of business.
  • Attractive Valuation: Assess the value of the company utilizing private equity approach to public markets.
  • Compelling Catalyst: Actions/events currently underway that may propel a company forward over the next three to five years.

Strategy Inception Date : November 1, 2010

Assets: $44,790.9 million (as of 12/31/2023)

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

Minimum Market Cap: Typically $2 billion at initial purchase

Cash: Typically less than 5%

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

Vehicles Offered: Separate Account; Mutual Fund; Collective Trust

As of: 12/31/2023

Performance

Trailing (%) QTD YTD 1 Yr 3 Yrs 5 Yrs 10 Yrs Since Inception1
Value Equity Composite (Gross) 14.43 20.59 20.59 9.04 14.82 11.82 12.96
Value Equity Composite (Net) 14.36 20.29 20.29 8.77 14.51 11.48 12.59
Russell 1000 Value Index 9.50 11.46 11.46 8.86 10.90 8.39 10.57
S&P 500 Index 11.69 26.29 26.29 10.00 15.68 12.03 13.35
Calendar Year (%) 2023 2022 2021 2020 2019 2018 2017
Value Equity Composite (Gross) 20.59 -14.58 25.87 15.29 33.50 -8.25 22.74
Value Equity Composite (Net) 20.29 -14.79 25.54 15.00 33.07 -8.58 22.34
Russell 1000 Value Index 11.46 -7.54 25.16 2.80 26.54 -8.27 13.66
S&P 500 Index 26.29 -18.11 28.71 18.40 31.49 -4.38 21.83
1The Aristotle Value Equity Composite has an inception date of November 1, 2010.
Past Performance is not indicative of future results. Performance results for periods greater than one year have been annualized. Returns are presented gross and net of investment advisory fees and include the reinvestment of all income. Gross returns will be reduced by fees and other expenses that may be incurred in the management of the account. Net returns are presented net of actual investment advisory fees and after the deduction of all trading expenses. This material is not financial advice or an offer to buy or sell any product. Please see important disclosures at the bottom of this web page.

Characteristics

  Value Equity R1000V
Number of Holdings 43 849
Active Share (%) 91.0
Annualized Turnover (5 Yrs, %) 13.8
Wtd. Avg. Market Cap ($B) 210.3 139.3
Dividend Yield (%) 1.8 2.3
Return on Equity (5 Yrs, %) 20.1 13.4

The Portfolio Characteristics shown are based on a representative account. Please see important disclosures at the bottom of this web page.

Market Cap Breakdown (%)

Portfolio Risk/Return Statistics

5 Years Value Equity Russell 1000 Value Index
Upside Market Capture (%) 106 100
Downside Market Capture (%) 92 100
Annualized Alpha (%) 3.87
Tracking Error (%) 4.58
R-Squared 0.94 1.00
Beta 0.98 1.00
Information Ratio 0.85
Sharpe Ratio 0.68 0.47

Largest Holdings (%)

Microsoft 4.3
Adobe 3.8
Parker Hannifin 3.5
Lennar 3.4
Martin Marietta Materials 3.2
Ameriprise Financial 3.0
Microchip Technology 3.0
ANSYS 2.8
Corteva 2.8
Amgen 2.6
Total 32.4

Sector Weights (%)

Sources: CAPS CompositeHubTM,SS&C Advent, FactSet, Russell Investments, Standard & Poor’s, eVestment
The Largest Holdings shown are based on total account of the model portfolio. The Market Cap Breakdown shown is based on a representative account. The Sector Weights shown are based on equity composition of the model portfolio and exclude cash. The Portfolio Risk/Return Statistics figures shown are gross of fees and based on the Aristotle Value Equity Composite (the Composite). The Sector Weights shown are based on the equity composition of the model portfolio and exclude cash. The representative account was chosen since, in our view, it is the account within the Composite that most closely reflects the portfolio management style of the strategy. Not every client’s account will have these exact characteristics. The actual characteristics with respect to any particular client account will vary based on a number of factors, including but not limited to: (i) the size of the account; (ii) investment restrictions applicable to the account, if any; and (iii) market exigencies at the time of investment. You should not assume that any of the securities transactions, sectors or holdings discussed in this report are or will be profitable, or that recommendations Aristotle Capital Management, LLC (Aristotle Capital) makes in the future will be profitable or equal the performance of the securities listed in this report. There is no assurance that any securities, sectors or industries discussed herein will be included in or excluded from an account’s portfolio. Aristotle Capital reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs. This is not a recommendation to buy or sell a particular security. Recommendations made in the last 12 months are available upon request. Past performance is not indicative of future results. The Russell 1000 Value Index measures the performance of the large cap value segment of the U.S. equity universe. It includes those Russell 1000® Index companies with lower price-to-book ratios and lower expected growth values. The S&P 500® Index is the Standard & Poor’s Composite Index of 500 stocks and is a widely recognized, unmanaged index of common stock prices. The volatility (beta) of the Composite may be greater or less than that of the benchmark. It is not possible to invest directly in these indices. Composite and index returns reflect the reinvestment of income. Composite returns are presented gross and net of actual investment advisory fees. Returns are presented net of trading costs. Net returns reflect the additional deduction of management fees and are based on the actual account-level net returns. Dividends are recorded gross of withholding taxes. Dividend Yield is the ratio of a firm’s dividends each year relative to its share price. Active Share is a measure of the percentage of stock holdings in a manager’s portfolio that differ from the benchmark index. Turnover is calculated by taking either the total purchases or total sales of portfolio securities (whichever is less), over a particular period, and dividing it by the monthly average market value of the portfolio during that period. Weighted Average Market Capitalization is a dollar-value measurement of the size of companies in a portfolio or index. In such a weighting scheme, an average figure is derived from the market capitalizations of each company (their market prices multiplied by the number of shares outstanding) multiplied by their weights in the portfolio or index. Return on Equity is the amount of net income returned as a percentage of shareholders’ equity. Return on equity measures a corporation’s profitability by revealing how much profit a company generates with the money shareholders have invested. Upside Market Capture is a measure of the performance in up markets relative to the market itself. Downside Market Capture is a measure of the performance in down markets relative to the market itself. Annualized Alpha is a measure of risk-adjusted excess return over the style index. Tracking Error is the annualized standard deviation of the differences between the portfolio and index returns. R-Squared is a measure of how closely related the variance of the manager returns and the variance of the benchmark returns are. Beta is used to measure market risk. It is defined as the average relationship, over time, of the portfolio’s rate of return to the style index. Standard Deviation is a measure of risk or variability of returns over time. Higher deviation represents higher volatility. Information Ratio is a measure of returns above the benchmark (usually an index) relative to the volatility of those returns. Sharpe Ratio is a measure of the excess return over the risk-free rate relative to standard deviation to determine the reward per unit of risk.

Aristotle Capital Management, LLC is an independent investment adviser registered under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about Aristotle Capital, including our investment strategies, fees and objectives, can be found in our Form ADV Part 2, which is available upon request. ACM-2401-19

Materials

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