Sectors Are a Primary Driver of Equity Returns.Thinking about sector composition through the business cycle can add value*.
Research has shown that sector exposure has been a significant driver of returns, accounting for 21% of return differentials across U.S. stocks.
Relying on traditional metrics such as market capitalization and style, many advisors have struggled to beat indexes. Equity style and size classifications may change over time, as they are based on backward-looking quantitative financial data. In contrast, sectors have fairly stable classifications, display clear patterns of volatility, and are imperfectly correlated to each other.
*Past performance is no guarantee of future results. Source: As of 10/31/17, based on rolling 12-month analysis of variance (ANOVA), which uses statistical models to attribute the variance of a variable (stock returns in the Russell 3000®) to certain factors (sector, style, and market cap). The residual is attributed to other company-specific factors.
An Investment Culture Built on Active, Risk-Disciplined Strategies
At Capital Innovations, our professionals have been actively observing and investing in the global markets for decades. Capital Innovations has an investment “Behavioral Edge” that leads the firm to the “Analytical Edge” and the “Informational Edge”; in other words, it is only possible to exploit the Analytical Edge and the Informational Edge when one has the Behavioral Edge which provides the context of a longer-term perspective for differentiated views and in-depth research. The strength of our investment culture derives in part from our emphasis on original thinking and fundamental research, complemented by our embrace of a diversity of investment strategies to help our clients achieve their unique investment objectives. From complex, multi-asset real return solutions to single real return strategies, our investment approach is anchored by a disciplined, risk-focused process. Risk management is now and has always been central to our investment culture and our commitment to our clients. It helps explain the longevity of relationships.
Michael D. Underhill, Founder & Chief Investment Officer
Real Assets - Real Expertise™
Specialized Portfolio Construction and Oversight
Capital Innovations adds value for clients through active management across all strategies. By adhering to a top down macro view combined with a disciplined bottom-up research driven approach, our team has consistently exceeded clients’ performance objectives regardless of market conditions. Capital Innovations’ fundamentally driven quantitative and qualitative security analysis, coupled with its risk averse approach to portfolio construction provides long-term results.
The portfolios are run day-to-day by the Chief Investment Officer, Michael Underhill. As Chief Investment Officer, Michael engineers the investment policy, deciding where to allocate its assets and its level of risk. Michael is supported by the entire team of investment professionals at Capital Innovations. This includes risk analysts and managers both within the company, and outside, but who work on its behalf. The full team works together to look after the investment portfolio, contributing research and investment ideas to make sure that the portfolios are growing your capital and income. Capital Innovations has had only one CIO since our inception. Prior to founding Capital Innovations, Michael worked for AllianceBernstein, INVESCO, Janus, Federated Investors and Lehman Brothers