MacKay Shields | Fundamental Equity Team

The Fundamental Equity team manages international equity portfolios through a bottom-up, research-driven investment approach. We typically hold 40-60 high quality and high conviction stocks, broadly diversified across regions and market capitalizations. Our portfolios offer high active share, low volatility, and downside protection. Four of the senior members of the team have worked together since 2011 and have maintained a consistent investment process. We manage our portfolios through a cohesive and collaborative team-based approach

We believe in the primacy of consistently delivering excess returns, while ensuring protection for our investors throughout volatile market environments. We seek to do so through an emphasis on sustainable growth, ultimately building valuation-conscious growth portfolios. Moreover, we invest long-term in companies that have diversified revenue streams and the ability to sustain growth, year-after-year, regardless of market cycles. Our research has shown that companies in the international equity universe that have historically sustained 7% earnings per share growth for five consecutive years, generally considered above average, have significantly outperformed all other constituents in the same universe. We seek to identify and capitalize on the most high quality and well positioned of these companies. We believe we are unique in our nimble size as well as in our willingness to invest across the market capitalization spectrum to take advantage of greater inefficiencies and mispricings.

We utilize a bottom-up approach to portfolio construction, focusing on companies we believe will have foreseeable sustainable growth backed by secular trends. Our investable universe is initially unconstrained and not limited by a benchmark. Our flexible approach to research expands across all sectors, geographies (excluding the U.S.), and market capitalizations to identify high conviction and high quality opportunities. An initial qualifying process immediately eliminates the stocks that do not meet our set of strict investment criteria and ultimately establishes the sustainable growth investable universe. Stocks must demonstrate the following: superior earnings growth potential, sustainable competitive advantages, secular growth trends, and low concentration risk.

International Equity All Country

Objective

The Fundamental International Equity All Country Strategy is a bottom-up investment strategy, incorporating individual company fundamental analysis, industry competitive dynamics, and analysis on secular trends to identify long-term holdings in companies that have the potential for sustainable growth.

Investment Universe

The team seeks investable ideas across all sectors, geographies (except the US), and market capitalizations. The Strategy’s investable universe is not constrained by the benchmark (the MSCI All Country World ex-US Index), therefore research can be conducted on any non-US company, so long as the stock meets the team’s strict fundamental investment criteria regarding sustainability.

International Equity

Objective

The Fundamental International Equity Strategy seeks to generate excess returns over a full market cycle against the MSCI EAFE Index by investing in sustainable growth companies that are attractively valued. The Strategy invests 100% long and employs a fundamental, bottom-up stock selection strategy.

Investment Universe

The team seeks investable ideas across all sectors, geographies (except the US), and market capitalizations. The Strategy’s investable universe is not constrained by the benchmark (the MSCI EAFE Index), therefore research can be conducted on any non-US company, so long as the stock meets the team’s strict fundamental investment criteria regarding sustainability.

Carlos Garcia-Tunon, CFA

Head of Fundamental Equity

Portfolio Managers / Analysts

4

Teams

Fundamental Equity Team

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