Presentation on theme: "USA Swimming June 2012. A BOUT F IRST W ESTERN A unique Western-based private bank offering integrated wealth management services Nine (9) locations throughout."— Presentation transcript:
A BOUT F IRST W ESTERN A unique Western-based private bank offering integrated wealth management services Nine (9) locations throughout the western United States As of January 2012, over $4 billion in assets under management, advice and administration and over $630 million in bank assets Inc. 500/5000’s fastest growing companies in 2008, 2009, and 2010, consistently among the top ranked bank/bank holding company on the list Best Places to Work – Denver Business Journal, 2008 finalist, Phoenix Business Journal 2010 finalist Fastest Growing Private Companies (Flight II) 2009-2010 Denver Business Journal -- #4 Who’s Lending? -- Denver Business Journal, 2010- # 1 bank with overall loan and lease portfolio growth among Denver-based banks Ranked as the #8 Denver-Area Trust Organization, based on the total Colorado fiduciary assets, according to the Denver Business Journal CoBIZ magazine’s Top Company 2010 Finalist Recipient of Colorado Business Committee for the Arts Philanthropy Award 2011 Ranked as the #3 Denver-based Investment Manager by the Denver Business Journal, 2011
B IOGRAPHY Katherine Berke, CFP® Senior Vice President | Senior Portfolio Manager Experience Katherine is a responsible for managing client relationships and developing and implementing custom financial plans. Ms. Berke has more than 17 years of professional experience, including an extensive background in comprehensive financial planning advisory services. Prior to joining First Western Trust, she headed her own financial planning firm where she specialized in wealth accumulation and management, retirement planning and retirement income distribution for her clients. Credentials MS degree in Management Science from the MIT, Sloan School of Business BS degree in Computer and Management Science from Metropolitan State College of Denver Carnegie Mellon University, Graduate School of Administration, eCommerce Program Series 7 and Series 66 licenses Certified Financial Planner® Involvement Board member of the Colorado Women’s Association of Financial Consultants Board member of the Denver Business Series Active member of the Financial Planning Association Volunteer mentor for Junior Achievement’s “Business Week” program
O VERVIEW Have an investment committee appointed by the board of directors to include the LSC Treasurer. Have a written Investment Policy Statements (IPS) approved by the board of directors. Obtain professional advice at a reasonable cost. A written service agreement must clearly state how the advisor is compensated. Have a diversified portfolio to meet the IPS’s goals, objectives, and risk profile. Advisor must be free of any conflicts of interest (real or perceived) with members of the board of directors and investment committee. I.Fundamentals of Investing II.Features of a quality investment process III.What to look for in a investment advisor Objectives LSC Investment Recommendations
0.10 1 10 100 1,000 $ 10,000 192619361946195619661976198619962006 $ 16,055 $ 2,982 $ 21 $ 12 $ 93 Small Cap Stocks Compound Annual Return: 12.1% Large Cap stocks Compound Annual Return: 9.9% Government Bonds Compound Annual Return: 5.5% T-Bills Compound Annual Return: 3.6% Inflation Compound Annual Return: 3.0% H ISTORICAL G ROWTH BY A SSET C LASS : 1926-2010 Source: Ibbotson Associates. 3/1/2011. Historically Large Cap U.S. Equities have provided s uperior long-term returns but... See Disclosure Information at the end of this presentation which are an integral part of this presentation and each page of the presentation.
H ISTORICAL V OLATILITY... the potential for higher returns comes with higher risk. Source: Ibbotson Associates. 3/1/2011.
D IVERSIFYING A WAY R ISK Example of five equity funds Correlations Building an efficient portfolio
LARGE CAP GROWTH 16.71 BONDS 7.84 BEST PERFORMANCE WEAKEST PERFORMANCE Please note that this chart is based on past index performance and is not indicative of future results. Indexes are unmanaged and cannot be invested in directly. Index performance does not include fees and expenses an investor would normally incur when investing in a mutual fund. Diversification and strategic asset allocation do not assure profit or protect against loss in declining markets. REAL ESTATE -37.73 LARGE CAP GROWTH -38.44 SMALL CAP GROWTH -38.54 INT’L -43.06 LARGE CAP VALUE -36.85 LARGE CAP -37.60 SMALL CAP VALUE -28.92 BONDS 5.24 SMALL CAP -33.79 INT’L 11.63 LARGE CAP GROWTH 38.71 SMALL CAP GROWTH 43.09 BONDS 10.26 SMALL CAP GROWTH 48.54 LARGE CAP GROWTH 23.12 LARGE CAP GROWTH 33.16 INT’L 20.33 INT’L 27.30 BONDS 11.63 BONDS 8.44 SMALL CAP VALUE 46.03 INT’L 20.70 LARGE CAP GROWTH 30.49 INT’L 39.17 BONDS 8.69 INT’L -15.66 SMALL CAP GROWTH 1.23 SMALL CAP GROWTH -9.23 SMALL CAP GROWTH 14.31 SMALL CAP GROWTH 11.26 SMALL CAP GROWTH 12.95 INT’L -13.96 INT’L 6.36 LARGE CAP GROWTH -22.42 LARGE CAP GROWTH -20.42 LARGE CAP GROWTH -27.89 LARGE CAP GROWTH 29.75 LARGE CAP GROWTH 6.30 BONDS 3.63 INT’L 2.06 SMALL CAP GROWTH -22.43 INT’L -21.21 SMALL CAP GROWTH -30.26 BONDS 4.10 BONDS 4.34 2008199619971998199920002001200220032004 SMALL CAP VALUE 4.71 INT’L 14.02 LARGE CAP GROWTH 5.26 BONDS 2.43 2005 SMALL CAP GROWTH 4.15 LARGE CAP VALUE 35.18 LARGE CAP VALUE 21.64 LARGE CAP VALUE 15.63 LARGE CAP VALUE 7.01 LARGE CAP VALUE -15.52 LARGE CAP VALUE -5.59 LARGE CAP VALUE 16.49 LARGE CAP VALUE 7.35 LARGE CAP VALUE 30.03 LARGE CAP VALUE 7.05 LARGE CAP VALUE 22.25 SMALL CAP GROWTH 13.35 2006 BONDS 4.33 LARGE CAP GROWTH 9.07 LARGE CAP 32.85 LARGE CAP 27.02 LARGE CAP 22.45 LARGE CAP 20.91 LARGE CAP -7.79 LARGE CAP -12.45 LARGE CAP -21.65 LARGE CAP 29.89 LARGE CAP 11.40 LARGE CAP 6.27 LARGE CAP 15.46 SMALL CAP 47.25 SMALL CAP 21.26 SMALL CAP 2.49 SMALL CAP 18.33 SMALL CAP 22.36 SMALL CAP -3.02 SMALL CAP 16.49 SMALL CAP -20.49 SMALL CAP -2.55 SMALL CAP 4.55 SMALL CAP 18.37 SMALL CAP VALUE 14.03 SMALL CAP VALUE 22.83 SMALL CAP VALUE 22.25 SMALL CAP VALUE 31.78 SMALL CAP VALUE -11.43 SMALL CAP VALUE 21.37 BONDS -0.82 BONDS 9.65 SMALL CAP VALUE -6.45 SMALL CAP VALUE -1.49 SMALL CAP VALUE 23.48 INT’L 26.86 REAL ESTATE 35.26 REAL ESTATE 26.35 REAL ESTATE 31.57 REAL ESTATE 13.93 REAL ESTATE 3.81 REAL ESTATE 37.14 REAL ESTATE 20.29 REAL ESTATE -17.51 REAL ESTATE -4.62 REAL ESTATE 12.15 REAL ESTATE 35.06 LARGE CAP VALUE -0.17 SMALL CAP GROWTH 7.05 2007 BONDS 6.97 LARGE CAP GROWTH 11.81 LARGE CAP 5.77 SMALL CAP -1.57 SMALL CAP VALUE -9.78 REAL ESTATE -15.69 INT’L 32.46 SMALL CAP GROWTH 34.47 BONDS 5.93 LARGE CAP GROWTH 37.21 2009 LARGE CAP VALUE 19.69 LARGE CAP 28.43 SMALL CAP 27.17 SMALL CAP VALUE 20.58 REAL ESTATE 27.99 SMALL CAP GROWTH 29.09 REAL ESTATE 27.95 SMALL CAP 26.85 SMALL CAP VALUE 24.50 LARGE CAP 16.10 LARGE CAP VALUE 15.51 INT’L 8.21 BONDS 6.54 2010 V ALUE OF DIVERSIFICATION 1996-2011 LARGE CAP GROWTH 2.64 REAL ESTATE 8.28 2011 LARGE CAP 1.50 LARGE CAP VALUE 0.39 SMALL CAP GROWTH -2.91 SMALL CAP -4.18 SMALL CAP VALUE -5.50 INT’L -12.14
V ALUE OF DIVERSIFICATION 1996-2011 Small Cap Value Russell 2000® Value Index Measures the performance of those Russell 2000® Index securities with lower price-to-book ratios and lower forecasted growth values, representative of US securities exhibiting value characteristics. Small Cap Russell 2000® Index Measures the performance of the 2,000 smallest companies in the Russell 3000® Index, representative of the US small capitalization securities market. Small Cap Growth Russell 2000® Growth Index Measures the performance of those Russell 2000® Index securities with higher price-to-book ratios and higher forecasted growth values, representative of US securities exhibiting growth characteristics. Large Cap Russell 1000® Index Measures the performance of the 1,000 largest companies in the Russell 3000® Index, representative of the US large capitalization securities market. Large Cap Value Russell 1000® Value Index Measures the performance of those Russell 1000® Index securities with lower price-to-book ratios and lower forecasted growth values, representative of US securities exhibiting value characteristics. Large Cap Growth Russell 1000® Growth Index Measures the performance of those Russell 1000® Index securities with higher price-to-book ratios and higher forecasted growth values, representative of US securities exhibiting growth characteristics. An index, with income reinvested, generally representative of intermediate-term government bonds, investment-grade corporate debt securities, and mortgage- backed securities. Bonds Barclays Capital U.S. Aggregate Bond Index International MSCI® EAFE Index An index, with dividends reinvested, representative of the securities markets of twenty developed market countries in Europe, Australasia, and the Far East. Real Estate NAREIT Equity REIT Index An index, with dividends reinvested, representative of tax- qualified REITS listed on the New York Stock Exchange, American Stock Exchange, and the NASDAQ National Market System. SOURCES:
M ORE F UNDS D O N OT A LWAYS M EAN G REATER D IVERSIFICATION Identifying potential security overlap Equity portfolio B Deep-valueCore-valueCoreCore-growthHigh-growth Micro Small Mid Large Giant Equity portfolio A Deep-valueCore-valueCoreCore-growthHigh-growth Micro Small Mid Large Giant Source: Morningstar, 2011.
E FFICIENT F RONTIER The theoretical maximum return for a portfolio of risky assets for a given level of “risk”. The theoretical minimum “risk” for a portfolio of risky assets for a given level of return. Frontier incorporates assumptions about risk and return that can be derived from historical data or developed using other methods.
S TOCKS AND B ONDS : R ISK V ERSUS R ETURN Maximum risk portfolio: 100% Stocks 60% Stocks, 40% Bonds 50% Stocks, 50% Bonds 100% Bonds Minimum risk portfolio: 28% Stocks, 72% Bonds 80% Stocks, 20% Bonds Return Risk
E QUITY R ETURNS An eventful three years! Staying the course through 2008 was challenging, but rewarding for investors who persevered Average calendar year return of 12% Note the distribution of returns to the right of 0% Trying to time the market to experience only positive years is very challenging Indexes are unmanaged and cannot be invested in directly. Returns represent past performance, are not a guarantee of future performance, and are not indicative of any specific investment. 2010
I NVESTMENT P ROCESS Asset allocation Portfolio construction Implementation Thorough understanding of capital market behavior Consideration of the available asset classes Well defined objectives and financial goals Effectively capture intended asset class exposure Focus on consistent return drivers Management of unrewarded risks Avoid areas of performance slippage Managed explicit and implicit costs Utilize unique insights to add value Create and Implement an Investment Policy Statement Manager research Broad coverage of available opportunities Access and perspective Combination of qualitative and quantitative analysis
A SSET A LLOCATION Why Do We Do It? What Is It? How Do We Do It?
B ROAD A SSET A LLOCATION S TOCK TO B OND R ATIO
M ANAGER S ELECTION P ROCESS Universe Initial Screen Quantitative Analysis Qualitative Analysis Final Selection Over 135,000 open-ended funds and over 10,000 separately managed accounts within the Morningstar Direct universe. Investment category, asset size of product, manager tenure, expense ratio & consistency to style. Rank based on performance parameters (Risk- adjusted return, upside/downside capture, category rank, consistency of performance. Analyze investment philosophy & style, manager compensation structure, firm reputation. Final selection is determined by the Investment Policy Committee, taking into account the criteria listed above.
M ULTI M ANAGER No one is best at everything Source: Beijing 2008 Olympic Games 0 5 10 15 20 25 30 35 40 % Outperformance by Individual Event Champion Event 100m Long Jump Shot Put High Jump 400m 110m Hurdles Discus Pole Vault Javelin 1500m Olympic Champion 8.34m9.69s 21.51m 2.36m 43.75s 12.93s 68.82m 5.96m 90.57m3:32.94 Decathlon Champion 7.78m10.44s16.27m1.99m48.92s13.93s53.79m70.97m5:06.595.00m
R USSELL B Y T HE N UMBERS For the fifth time in six years, Russell has been recognized as the “Best Multi-Manager of the Year” at the Global Pensions Awards. Best Multi-Manager of the Year Russell has one of the most effective due diligence practices in the consulting industry, according to a 2012 FundFire survey of more than 50 consultant relations specialists. Voted Top in Due Diligence Unless otherwise indicated, all data is as of December 31, 2011. * As of 3/31/2012 The awards shown here do not pertain to specific mutual funds referenced in this presentation. **Global Investor “Top Marks” categories include: project management, operational efficiency, pre trade analysis, trading / execution, risk management, reporting during transition, post trade analysis, accuracy of pre trade analysis, transparency of fees and costs, relationship management, overall service. Russell received “Top Marks” in every category* in 2011 – for the sixth year in a row – in the transition management survey conducted by Global Investor magazine.** Received Top Marks In Every Category 29 ›U.S. $155 billion assets under management* ›1,900 associates globally ›24 offices worldwide ›Over 6,000 investment products researched ›As a consultant to some of the largest pools of capital in the world, Russell has over $2 trillion in assets under advisement (as of 12/31/2011).
R USSELL M ONEY M ANAGERS GrowthMarket-orientedValue BlackRock Capital Management, Inc. Columbus Circle Investors Sustainable Growth Advisers, LP Lazard Asset Management, LLC Suffolk Capital Management, LLC Institutional Capital, LLC Schneider Capital Management Corporation Snow Capital Management L.P. Aronson+Johnson+Ortiz, L.P. INTECH Investment Management, LLC Jacobs Levy Equity Management, Inc. Numeric Investors, LLC PanAgora Asset Management, Inc. EAM Investors, LLC Falcon Point Capital, LLC Next Century Growth Investors, LLC Ranger Investment Management, L.P. ClariVest Asset Management, LLC PENN Capital Management Company, Inc. Chartwell Investment Partners DePrince, Race & Zollo, Inc. Huber Capital Management LLC Jacobs Levy Equity Management, Inc. Signia Capital Management, LLC Axiom International Investors, LLC Driehaus Capital Management, LLC Marsico Capital Management, LLC William Blair & Company, LLCAQR Capital Management, LLC MFS Institutional Advisors, Inc. AQR Capital Management, LLC MFS Institutional Advisors, Inc. del Rey Global Investors, LLC Mondrian Investment Partners Limited Pzena Investment Management, LLC UBS Global Asset Management (Americas), Inc. Arrowstreet Capital, Limited Partnership Genesis Asset Managers, LLP Harding Loevner, LP Victoria 1522 Investments, LP AllianceBernstein, L.P. Delaware Management Company (a series of Delaware Management Business Trust) Global Market Oriented AEW Capital Management, L.P. Cohen & Steers Capital Management, Inc. INVESCO Advisers, Inc., through INVESCO Real Estate Division Russell U.S. Core Equity Russell U.S. Quantitative Equity Russell U.S. Small Cap Equity 1 Russell Int’l Developed Equity Russell Emerging Markets Russell Global Real Estate Securities Money managers listed are current as of 03/31/12. Subject to the fund's Board approval, Russell has the right to engage or terminate a money manager at any time and without a shareholder vote, based on an exemptive order from the Securities and Exchange Commission. Investments in the Funds are not deposits with or other liabilities of any of the money managers and are subject to investment risk, including loss of income and principal invested and possible delays in payment of redemption proceeds. The money managers do not guarantee the performance of any Fund or any particular rate of return. 1 Small cap investments are subject to considerable price fluctuations and are more volatile than large company stocks.
P ORTFOLIO C ONSTRUCTION S UMMARY Manager selection Primary source of excess return “Best of breed” security pickers Specific opinions for individual investment managers Asset class specialists Portfolio construction Source of improved consistency Limit uncompensated risk Diverse and complementary sources of excess return Low return correlations* *Correlation is a statistical measure of how two variables move in relation to each other.
C USTOMIZING A P ORTFOLIO Asset Allocation Implementation Stocks Bonds Cash Management Alternatives Risk Management Manager Selection Investment Grade Taxables High Yield Muni Global Small Cap Mid Cap Large Cap Major Foreign Markets Emerging Markets CDARs Money Market Commodities REITS Balanced Portfolio
P ORTFOLIO M ANAGEMENT O BJECTIVES Manage portfolio strategies that effectively represent asset classes and risk profiles Captures value added from research inputs Combine premier managers with complementary investment portfolios Manage risks that offer no long-term rewards Generate above-average returns with long-term consistency Core Growth Earnings Momentum Core Neutral Core Value Low P/E High Yield Consistent Growth
Determine goals and objectives Develop optimal asset allocation to achieve goals and objectives Actively manage investment portfolio Fiduciary Oversight Monitor and update goals and objectives F IRST W ESTERN A PPROACH
F IRST W ESTERN F EE S TRUCTURE LSC Investment SizeSolution Fee StructureFees IPS $100-$250,000Investment Mgmt Fee.50% Stand alone Average LifePoints Fund1.03% Total Approx. Fee1.53% $250-$750,000Investment Mgmt Fee.75% Master Average Fund Expense.77% Total Approx. Fee1.52% Over $750,000Investment Mgmt Fee.75% Stand alone Average Fund Expense.77% Total Approx. Fee1.52%