Applied Enhanced Index Russell 1000 Strategy

Applied Enhanced Index Russell 1000 Strategy

Applied Enhanced Index Russell 1000 Strategy


The Applied Enhanced Index Russell 1000 Strategy seeks to achieve Russell 1000 Index-like returns after fees. By employing quantitative models, the team aims to identify 200-300 stocks that, in aggregate, have exposure to factors it believes will drive returns in the current market environment.

The final portfolio is designed to have a modest tracking error and align closely with the Russell 1000 Index in terms of industry, sector, style and company size.

Investment Approach

We believe common, market-oriented factors drive the majority of stock returns.

Over the last 20 years, market-driven factors have explained about 65% of the relative performance of global separate account managers1.

Our goal is to extract value from these return drivers.

Using proprietary methodology, we seek to identify those factors most likely to produce excess returns in the current environment. Through quantitative modeling and screening, we then tilt the portfolio toward stocks with exposure to those factors.


Portfolio is positioned to gain exposure to broad market factors that the team believes will drive returns in the current market environment. The investment process seeks to protect investors from prolonged periods of style-driven under performance. 


To manage tracking error and overall volatility, the team seeks to closely align the portfolio’s sector weightings, average market capitalization and beta with the Russell 1000 Index. 


By constructing a portfolio that closely mirrors the characteristics of the Russell 1000 Index, and tilting it toward potential alpha-generating factors investors have the possibility of realizing index-like returns on an after-fee basis.  

Investment Process



Portfolio Managers  
Andrew Slimmon
Head of Applied Equity Advisors Team
37 years industry experience
Phillip Kim
Executive Director
20 years industry experience


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 and may therefore be less than what you paid for them. Market values can change daily due to economic and other events (e.g. natural disasters, health crises, terrorism, conflicts and social unrest) that affect markets, countries, companies or governments. It is difficult to predict the timing, duration, and potential adverse effects (e.g. portfolio liquidity) of events. Accordingly, you can lose money investing in this Portfolio. Please be aware that this Portfolio may be subject to certain additional risks. In general, equities securities’ values also fluctuate in response to activities specific to a company. Stocks of small-and medium-capitalizationcompanies entail special risks, such as limited product lines, markets and financial resources, and greater market volatility than securities of larger, more established companies. Investments in foreign markets entail special risks such as currency, political, economic, market and liquidity risks. Illiquid securitiesmay be more difficult to sell and value than publicly traded securities (liquidity risk). Non-diversified portfolios often invest in a more limited number of issuers. As such, changes in the financial condition or market value of a single issuer may cause greater volatility.

1Source: Morningstar. Based on Rolling 18-month R-squared for Global Equity Managers Time Series Regression. Information as of December 31, 2015. Past performance is not indicative of future results. For illustrative purposes only.

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 appropriate 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.


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 1000® Index is an index that measures the performance of the 1,000 largest companies in the Russell 3000 Index.

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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