Fundamental All Cap Equity ex MLP Strategy
Fundamental All Cap Equity ex MLP Strategy

Fundamental All Cap Equity ex MLP Strategy

 
 
 
Summary

The Fundamental All-Cap Equity ex MLP Strategy represents an actively managed strategy that seeks to outperform the Russell 3000 Index with a focus on risk management. The strategy looks for companies with strong free cash flow, attractive valuations, profit margin expansion opportunities, strong management and changing internal dynamics.

 
 
Investment Approach
Philosophy

Using a rigorous fundamental approach to stock selection, the team seeks to identify undervalued equities.

 
Differentiators
Emphasis on Stock-specific Fundamentals

Analysis of individual securities with the goal of assessing intrinsic value by balancing potential rewards and risks, using conservative assumptions.

Orientation Toward Risk Management

Risk management is integral to the process and includes analysis of risk factors, position sizing, portfolio monitoring, liquidity analysis and forensic accounting by an independent party.

Rich Pool of Intellectual Capital

Proprietary research as well as a vast array of internal and external information sources are used to make portfolio decisions.

 
 
 
Investment Process
1
Team Approach

Each team member brings their own unique industry experience and skill set to the evaluation process, while leveraging a common, time-tested investment approach.

2
Bottom-up Approach to Stock Selection

The team determines a security’s “intrinsic value” using traditional macro and fundamental  factors – such as sales growth, profit margins, and earnings. These criteria are analyzed in concert with critical inputs such as investor sentiment and estimate revision trends.

3
Risk Management Orientation

The investment process is driven by a recognition that every decision balances potential risk with potential reward. The quality and sustainability of a company’s earnings and cash flow is a core component of this approach. The team’s internal analysis is supported by an independent forensic accounting firm.

 
 
Portfolio Managers
Head of Fundamental Equity Advisors Team
34 years industry experience
Managing Director
18 years industry experience
Executive Director
16 years industry experience
 
 
 
 

RISK CONSIDERATIONS  

Diversification does not protect you against a loss in a particular market; however it allows you to spread that risk across various asset classes.

There is no assurance that a Portfolio will achieve its investment objective. Portfolios are subject to market risk, which is the possibility that the market values of securities owned by the Portfolio will decline. Accordingly, you can lose money investing in this Portfolio. Please be aware that this Portfolio may be subject to certain additional risks. In general, equity securities' values also fluctuate in response to activities specific to a company. Investments inforeign markets entail special risks such as currency, political, economic, and market risks. American Depositary Receipts (ADRs) represent an ownership interest in securities of foreign companies and involve many of the same risks as those associated with direct investment in foreign securities, including currency, political, economic and market risks. Exchange traded funds (ETFs) shares have many of the same risks as direct investments in common stocks or bonds and their market value will fluctuate as the value of the underlying index does. By investing in exchange traded funds (ETFs), the portfolio absorbs both its own expenses and those of the ETFs it invests in. Supply and demand for ETFs may not be correlated to that of the underlying securities. The strategy may, from time to time, emphasizecertain market sectors. To the extent the strategy does so, it is more susceptible to economic, political, regulatory and other occurrences influencing those sectors. Stocks of small- and medium-capitalization companies entail special risks, such as limited product lines, markets and financial resources, and greater market volatility than securities of larger, more established companies. Besides the general risk of holding securities that may decline in value, closed-end funds may have additional risks related to declining market prices relative to net asset values (NAVs), active manager underperformance, and potential leverage. Some funds also invest in foreign securities, which may involve currency risk. Individual Master Limited Partnerships (MLPs) are publically traded partnerships that have unique risks related to their structure. These include, but are not limited to, their reliance on the capital markets to fund growth, adverse ruling on the current tax treatment of distributions (typically mostly tax deferred), and commodity volume risk. The potential tax benefits from investing in MLPs depend on their being treated as partnerships for federal income tax purposes and, if the MLP is deemed to be a corporation, then its income would be subject to federal taxation at the entity level, reducing the amount of cash available for distribution to the fund which could result in a reduction of the fund's value. MLPs carry interest rate risk and may underperform in a rising interest rate environment.

 

This communication is only intended for and will be only distributed to persons resident in jurisdictions where such distribution or availability would not be contrary to local laws or regulations.

There is no guarantee that any investment strategy will work under all market conditions, and each investor should evaluate their ability to invest for the long-term, especially during periods of downturn in the market. Past performance is no guarantee of future results.

A separately managed account may not be suitable for all investors. Separate accounts managed according to the Strategy include a number of securities and will not necessarily track the performance of any index. Please consider the investment objectives, risks and fees of the Strategy carefully before investing. A minimum asset level is required. For important information about the investment manager, please refer to Form ADV Part 2.

Any views and opinions provided are those of the portfolio management team and are subject to change at any time due to market or economic conditions and may not necessarily come to pass. Furthermore, the views will not be updated or otherwise revised to reflect information that subsequently becomes available or circumstances existing, or changes occurring. The views expressed do not reflect the opinions of all portfolio managers at Morgan Stanley Investment Management (MSIM) or the views of the firm as a whole, and may not be reflected in all the strategies and products that the Firm offers.

All information provided has been prepared solely for information purposes and does not constitute an offer or a recommendation to buy or sell any particular security or to adopt any specific investment strategy. The information herein has not been based on a consideration of any individual investor circumstances and is not investment advice, nor should it be construed in any way as tax, accounting, legal or regulatory advice. To that end, investors should seek independent legal and financial advice, including advice as to tax consequences, before making any investment decision.

OTHER CONSIDERATIONS

The indexes are unmanaged and do not include any expenses, fees or sales charges. It is not possible to invest directly in an index. Any index referred to herein is the intellectual property (including registered trademarks) of the applicable licensor. Any product based on an index is in no way sponsored, endorsed, sold or promoted by the applicable licensor and it shall not have any liability with respect thereto.

The Russell 3000® Index measures the performance of the largest 3,000 U.S. companies representing approximately 98% of the investable U.S. equity market. The Russell 3000 Index is constructed to provide a comprehensive, unbiased and stable barometer of the broad market and is completely reconstituted annually to ensure new and growing equities are reflected.

The information presented represents how the portfolio management team generally implements its investment process under normal market conditions.

Morgan Stanley Investment Management is the asset management division of Morgan Stanley.  

 

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