Socially Responsible Investing With Managed Accounts

butterbeansarmManagement

Nov 18, 2013 (3 years and 9 months ago)

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Socially Responsible Investing
With Managed Accounts
Greg Verfaillie
Senior Vice President and National Sales Director
Date
Who Is Curian Capital?
Curian is an Asset Management platform developed
by
advisors
for
advisors that focuses on increasing your profitability and
efficiency while offering your client a customized investment solution.
500
1,000
1,500
2,000
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
5
10
# of Accounts
(M)
$3.2 T
12.5 M
Source: Financial Research Associates, LLC
$1.9 T
5.3 M
2,500
SMA Assets ($M)
Number of Accounts (M)
SMA Ass
ets
$
M
A Look Ahead…

I’ll take a large, 147,
double pump, soy, decaf,
non-fat, hold the whip,
add caramel, double
espresso, Tahitian
Vanilla Latte please.”
Our Customized Culture
Consumer Evolution
1930
1964
1982
2001
1919
1964
1991
2007
Consumer Evolution
Investment Evolution
The three unique Curian Capital platform benefits:

Efficiency • Single Solution • Peace of Mind
Your Practice and Prosperity
Efficiency

Paperless

Web-based

Online proposal and account-opening features
Your Practice and Prosperity
Single Solution

Thoughtful portfolio structure & broad diversification

Discipline rebalancing & active management

Tax harvesting to measurably reduce taxes
Your Practice and Prosperity
Peace of Mind

Written Investment Policy Statement

Curian is fiduciary with regard to suitability and investment selection

Four levels of investment management oversight
Your Practice and Prosperity
Efficiency
Feature:
Streamlined proposal process and
account opening features
Benefit:
Ultimate simplicity

Efficiency
Proposal Center
Efficiency
Proposal System
Efficiency
Easy Portfolio Construction
Efficiency
Easy Portfolio Construction
Efficiency
Customization Options
Efficiency
Customization Options
Efficiency
Presentation Marketing Materials
Proposal Document
and Investment
Policy Statement
Efficiency
Single Solution
Feature:
One solution for all clients


Thoughtful portfolio structure


Disciplined rebalancing


Broad diversification
Benefit:
Institutional investment
philosophy and process
for all accounts
As of 12/31/07
6.2%
2
Average
eq
uity fund
in
vesto
r
10-Year Average Annual Gross Return: 1998-2007
8.6%
1
Fou
ndations and endowments
8.4%
2
S&P 5
00
Index
8.0%
1
7.7%
1
Corporate pension pl
ans
1
Source: Mellon Analytical Solutions, median returns as cited in Mercer Investment Consulting’s “Summary Performance of US Plan Sponsor Funds,” December 31, 2007.
2
Source: DALBAR, Inc., “Quantitative Analysis of Investor Behavior (QAIB)—2007.”
Results shown are gross of fees. Fees and expenses related to each group shown will differ depending on the investment objectives and strategy, the size of an account, extent of services rendered, risk, restrictions, tax considerations, etc. This information has been
provided by outside sources that we believe are reliable. However, no further verification or adjustments have been made on our part to the data. “Foundations and endowments” is a broad foundation/endowment fund universe comprised of 82 plans of various sizes.
“Corporate pension plans” is a broad corporate fund universe comprised of 141 corporate pension plans of various sizes. “Public pension plans” is a broad public fund universe comprised of 43 public pension plans of various sizes. The “S&P 500 Index” is a market-
value-weighted index that measures the performance of 500 large-capitalization U.S. stocks. “Average equity fund investor” refers to the universe of all domestic equity mutual fund investors whose actions and financial results are restated to represent a single investor.
None of these results include performance in the Curian Program, which launched in March 2003. Past performance is no guarantee of future results.
Curian Capital, LLC is a Registered Investment Advisor offering managed accounts to investors. Investing in securities involves certain risks, including possible loss of principal.
The expenses and fees for participating in the Curian Program are described in the Wrap Fee Program Brochure, which can be found in the Forms Library at www.curian.com.
Advisory information not intended as a solicitation or recommendation.
Single Solution
Public pen
sion
plans
Goal:

Maximize the probability of meeting well-defined investment objectives


Institutional resources


Defines past success


Defines future potential

Single Solution
You don’t have to win every race to
come in first at the end.
What does it
take to win seven Tours de France?
21 Stages Per Race
Total of 147 Stages
Number of Stages Won:
Single Solution
Smoother is Better
23 or 16%
Commitment to an
Optimal Allocation
Single Solution
CSP Portfolio Construction
Manager Selection

(PROOF)
Draws on institutional resources
for manager due diligence
Implementation Preferences

Facilitates commitment
Market exposure aligned
with investor preferences
Strategic Allocation

Primary driver of returns
Defines 90%+
of performance differentials
CSP Implementation Strategies
Active Management
Market exposure aligned with investor preferences
Acknowledge the behavior of individual investors

Investor types with tendencies for:
1.
Under allocation to equities
due to volatility intolerance
2.
Emotional market-timing
3.
Sitting on the sidelines
4.
Self described “Value”
oriented investor
5.
Down side aversion
Investor types focused on:
1.
Relative returns
2.
Potential value added regardless
of market cycle
3.
Tolerance for market-like volatility
4.
Intolerance for extended periods
of lagging performance
Defensive
Core
Single Solution
$
25
mil min account
$
3
mil min account
$
1
mil min account
$
30
mil min account
$
25
mil min account

$
5
mil min account
$
25
mil min account
$
10
mil min account
$
25
mil min account
Core Strategy
Defensive Strategy
Single Solution
Feature:
Portfolio Customization
Benefit:
Environmental and social issues
are now very much a part of the
investment landscape.
ISS
helps institutional asset managers
like Curian meet client- driven
investment mandates.
ISS’ Expertise
ISS’ unsurpassed coverage
of social issues:
ISS
applies rigorous, uniform
screening standards that are based on
verifiable quantitative research from a
staff of over 170 analysts.
.


Start with a list of client-defined social/environmental issues (alcohol,
tobacco, nuclear weapons, etc).


Conduct a global search to identify publicly traded companies that
participate in each issue.


Maintain and update screening lists periodically.
The ISS Approach


ISS
searches a vast universe of publicly traded companies
(e.g., S&P and Russell index constituents, ADR’s, multinationals).


ISS
relies on publicly available information (e.g., SEC filings,
LexisNexis reports, Internet content) and proprietary databases
to track every component of a company’s operations.


ISS
maintains the largest environmental, social and governance
screening staff and database in the industry, covering over
35,000 companies.


Over 75% of their staff is involved in day-to-day qualitative research,
ata procurement and company analysis.

ISS’ Research Process


Adult Entertainment


Alcohol


Animal Welfare


Board Diversity


Contraceptives


Environmental Performance


Firearms
Curian’s Social Screens


Gambling


Human Rights


Labor Relations


Nuclear Power


Stem Cell Research


Tobacco


Weapons/Military


Every month,
ISS
provides Curian with a detailed, up-to-date list of
companies for each social issue.


All Curian accounts with Socially Responsible Objectives are
automatically screened for cross reference consistency with the
ISS
list.
Tracking Exclusions
Examples of ISS’ screening criteria:


Production or manufacture of a product


Percentage of revenue from sale of a product


Distribution or marketing of a product


Supplier of a product


Owner of a product


Companies on a watch list
Screening Criteria
Custom Exclusions
While the
ISS
screening process is
comprehensive and sets the industry
standard for Socially Responsible
exclusions, Curian facilitates additional
exclusions of
individual
companies at
the individual account level.
Efficiency
Customization Options
Peace of Mind
Feature:
Curian is the fiduciary
for the account
Benefit:
Covers creating a CSP
for clients and its ongoing
investment management
Americans Need A Solid Investment Plan

Investors Still Aren’t Getting It,”
Financial Planning
. Dec. 10, 2003
Unfortunately …
90% of investors do not have a financial plan
Peace of Mind
Feature:
Professional investment oversight
Benefit:
A consistent repeatable process
Peace of Mind
Four Levels of Investment Management Oversight
Peace of Mind
Four Levels of Investment Management Oversight
Peace of Mind
Four Levels of Investment Management Oversight
Peace of Mind
Four Levels of Investment Management Oversight
Peace of Mind
Four Levels of Investment Management Oversight
Goal:

Maximize the probability of meeting well-defined investment objectives


Institutional resources


Defines past success


Defines future potential

The Curian Consulting Process
Internal Business Consultant Desk
(877) 847- 4192
www.curian.com

How to Get Started…