Large-Cap Value

Philosophy

We believe extensive research experience and sector specialization allow us to consistently generate an information advantage:

• ING’s Large Cap Value investment philosophy is to seek unrecognized value by utilizing a bottom-up research process to identify companies with above-average dividend yields and strong fundamental outlooks which are trading at attractive valuations. 
• Our Large Cap Value strategy combines the power of dividends with the power of favorable stock selection by our senior research analysts, who average close to twenty years of investment experience.
• The strategy is designed to systematically capture the best ideas of our experienced research analysts in order to consistently outperform its benchmark while taking relatively low risk.
• The portfolio performance will be driven by stock selection, not sector rotation or macro or thematic investments.

Objective

Our objective is to outperform the Russell 1000 Value by 2-3% annually before management fees and other fund expenses over full market cycles with annualized tracking error of 4-6%.

Process

Our initial investment universe consists of approximately 1,200 US stocks including ADRs, with market capitalizations in excess of $2 billion.  A screen for stocks with a dividend yield above 1.5% narrows the large-cap universe down to 500-600 value stocks. Next we screen and rank each stock relative to both its own sector and to the entire value universe, using valuation and quality factors such as free cash flow/enterprise value, enterprise value to EBITDA, and dividend growth. The screening factors and their weights are customized by sector. The screens are not used for stock selection but rather to help focus the analysts’ attention on stocks which merit further fundamental research. The research team then utilizes an intensive process to evaluate the profitability, financial strength and valuation characteristics of those securities that appear attractive based on the sector-specific screening process. While each analyst utilizes a customized framework for stock selection, the team seeks to find companies that show improving trends in any or all of the following areas: capital allocation, competitive advantages and end-market strength.  The analysts’ original insights on each stock purchase candidate form the basis of our information advantage, without which we are simply "buying the consensus."

While the entire team has responsibility for the Large-Cap Value strategy, portfolio managers have ultimate responsibility, authority and accountability for the investment process, risk profile, performance and style consistency, and they make final purchase and sale decisions.