Large-Cap Value

Philosophy

We believe extensive research experience and sector specialization allow us to consistently generate an information advantage and superior risk adjusted returns. Toward that end:

• ING Large Cap Value is a dividend-focused strategy, where stock selection by a very experienced team of analysts is the primary driver alpha
• Deep industry expertise combined with sector specific research methodologies lead to uncorrelated sources of alpha
• Stock selection is driven by a team of very experienced investment specialists, whose mandate is to generate highest alpha ideas and identify outliers in their respective sectors
• Portfolio Managers add alpha by rigorously vetting ideas and following a disciplined portfolio construction process, resulting in superior risk-adjusted returns
• The portfolio management team adds alpha through rigorous vetting of ideas and disciplined portfolio construction

Objective

Our objective is to outperform the Russell 1000 Value by 2-3% annually before management fees and other fund expenses over full market cycles with an expected annualized tracking error of 4-6%.

Process

Our initial investment universe consists of approximately 1,200 US stocks including ADRs, with market capitalizations in excess of $2 billion. A screen for stocks with a dividend yield above 1.5% narrows the large-cap universe down to 500-600 value stocks. Next we screen and rank each stock relative to both its own sector and to the entire value universe, using valuation and quality factors such as free cash flow/enterprise value, enterprise value to EBITDA, and dividend growth. The screening factors and their weights are customized by sector. The screens are not used for stock selection but rather to help focus the analysts’ attention on stocks which merit further fundamental research. The research team then utilizes an intensive process to evaluate the profitability, financial strength and valuation characteristics of those securities that appear attractive based on the sector-specific screening process. While each analyst utilizes a customized framework for stock selection, the team seeks to find companies that show improving trends in any or all of the following areas: capital allocation, competitive advantages and end-market strength. The analysts’ original insights on each stock purchase candidate form the basis of our information advantage, without which we are simply "buying the consensus."

While the entire team has responsibility for the Large-Cap Value strategy, portfolio managers have ultimate responsibility, authority and accountability for the investment process, risk profile, performance and style consistency, and they make final purchase and sale decisions.