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BARROW STREET
A D V I S O R S
The Timely Case for
Quality and Value Stocks
December 2016
Barrow Street Advisors LLC
Executive Overview
Barrow Street Advisors LLC
Outperformance
Quality and Value have outperformed the market over rolling 3-year
periods on average by 13.4% and 13.2%, respectively.
This is based on data since December 1994 for the S&P 500 Quality
Index and since June 1995 for the S&P 500 Pure Value Index.
Consistency
On a rolling 3-year basis, this outperformance has been consistent.
Opportunity
The periods when Quality and Value are out of favor have
represented the best time to invest in these styles based
on historic subsequent performance.
Source: Bloomberg
Data is as of 9/30/16 and is provided for illustrative purposes only. Market information shown (such as that of the S&P 500 Index, S&P 500 Quality Index and S&P 500 Pure Value Index) is inclusive of
reinvestment of dividends and shows relative market performance for the periods indicated. Market index information shown is based on widely available information believed to be reliable; however, Barrow
Street makes no guarantee or warranty hereby as to the completeness or accuracy of such data. Information herein should not be construed as an offer to sell, or a solicitation of an offer to buy, an interest in
any funds or accounts managed by BSA or as a recommendation for or against any security or financial product. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE PERFORMANCE.
Every investment involves the risk of loss. Please see the last page of this presentation for additional important disclosures.
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Historical Quality Overview
Barrow Street Advisors LLC
Barrow Street Advisors LLC
S&P 500 Quality Index Overview
S&P 500 Quality Index: Designed to track high quality stocks in the S&P 500
using a quality score, which is calculated based on a blend of return on equity,
financial leverage, and quality of earnings (accruals ratio)
Construction Methodology
Universe
Members of S&P 500
Constituent
Selection
Top 100 eligible securities are selected for index by quality score.
The score is based on a composite of each stock’s return on equity,
financial leverage, and accruals ratio
Components are weighted by a product of quality score and the
float-adjusted market cap
Weighting
Barrow Street Advisors LLC
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Looking to Position Portfolios for 2017?
Consider High Barrow
QualityStreet
Stocks
Advisors LLC
Rollingthe3-Year
Quality
Higher quality companies (S&P 500 Quality Index) have been underperforming
overall market
(S&PReturns
500 Index)
since 2014, as shown in the chart below. When it comes to market leadership, we believe in mean reversion,
as consecutive years of outperformance by the broader market have been followed by strong returns in higher
S&P 500 Quality Index – S&P 500 Index
quality stocks.
Relative Rolling 3-Year Returns
With an investment process guided by our private
equity–perspective,
we believe now is an opportune time to
(12/94
9/16)
hold high quality companies that appear to be undervalued and overlooked.
S&P 500 Index outperforms
Will Higher
S&P 500 Quality Index
leading up to tech bubble
40%
S&P 500
Index outperforms
500 Index outperforms
Quality
Companies
Take the Lead in S&P
2017?
S&P
500 Quality
Index
leading
Relative
Rolling
3-Year
Returns
up to financial crisis
S&P 500 Quality Index
leading up to...
30%
?
20%
10%
0%
-10%
-20%
12/97
12/98
12/99
12/00
12/01
Source: Barrow Funds and Bloomberg
12/02
12/03
12/04
12/05
12/06
12/07
12/08
12/09
12/10
12/11
12/12
12/13
12/14
12/15 9/16
S&P 500 Quality Index minus S&P 500 Index
Read More in Our Commentary
Data is as of 9/30/16 and is provided for illustrative purposes only. Market information shown (such as that of the S&P 500 Index and S&P 500
Data is as Index)
of 9/30/16is
andinclusive
is provided for
purposes only.
Market information
(such as
that of themarket
S&P 500 Index
and S&P 500 Quality
Index)
is inclusive
of reinvestment of dividends and
Quality
ofillustrative
reinvestment
of dividends
andshown
shows
relative
performance
for the
periods
indicated.
shows relative market performance for the periods indicated. Market index information shown is based on widely available information believed to be reliable; however, Barrow Street makes no guarantee
Barrow Street Advisors LLC
Mutual
fund
involvesorrisk.
Principal
loss
is possible.
ThenotFund’s
investment
risks,
expenses
be considered
or warranty
herebyinvesting
as to the completeness
accuracy
of such data.
Information
herein should
be construed
as an offer to objectives,
sell, or a solicitation
of ancharges
offer to buy, and
an interest
in any fundsmust
or accounts
managed by BSA
or as ainvesting.
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PASTother
PERFORMANCE
IS NOTinformation
NECESSARILY INDICATIVE
FUTURE
PERFORMANCE.
carefully
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The
contains
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the
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Page 5
Every investment involvesRead
the risk it
of loss.
Please see
the last page
of this presentation
for additional
important disclosures.
1-877-767-6633.
carefully
before
investing.
Distributed
by Ultimus
Fund Distributors, LLC.
The Fund invests in small and mid cap companies, which involves additional risks such as limited liquidity and greater volatility. The
Barrow Street Advisors LLC
Rolling 3-Year Quality Returns
S&P 500 Quality Index Returns Outperform the S&P 500 Index
in 93% of 3-Year Rolling Periods
(12/94 – 9/16, measured monthy)
200%
Outperform
S&P 500 Quality Index
150%
-60%
-40%
50%
-20%
0%
-50%
Barrow Street Advisors LLC
Underperform
100%
0%
20%
40%
60%
80%
100%
120%
140%
160%
S&P 500 Index
Source: Bloomberg
Data is as of 9/30/16 and is provided for illustrative purposes only. Market information shown (such as that of the S&P 500 Index and S&P 500 Quality Index) is inclusive of reinvestment of dividends and
shows relative market performance for the periods indicated. Market index information shown is based on widely available information believed to be reliable; however, Barrow Street makes no guarantee
or warranty hereby as to the completeness or accuracy of such data. Information herein should not be construed as an offer to sell, or a solicitation of an offer to buy, an interest in any funds or accounts
managed by BSA or as a recommendation for or against any security or financial product. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE PERFORMANCE.
Every investment involves the risk of loss. Please see the last page of this presentation for additional important disclosures.
Page 6
Barrow Street Advisors LLC
Historical Relative Quality Returns
S&P 500 Quality Index NAV/S&P 500 Index NAV
Relative Wealth Chart
(12/94 – 9/16)
2.40
2.10
1.90
1.70
2.10
Beginning in November
1998 the S&P 500 Index
outperforms the S&P 500
Quality Index until the Tech
Bubble bursts in March 2000
Since September 2011 the
S&P 500 Index and the
S&P 500 Quality Index have
moved together
From October 2002 until the lead
up to the Financial Crisis, the
S&P 500 Index and the S&P 500
Quality Index move in lock step
1.30
1.10
0.90
12/94
12/95
12/96
12/97
12/98 12/99
12/00
12/01
12/02
12/03
12/04
12/05
12/06
12/07
12/08
12/09
12/10
12/11
12/12
12/13
12/14
12/15 9/16
S&P 500 Quality Index/ S&P 500 Index
Line Trending Up = Outperformance
Line Trending Down = Underperformance
Barrow Street Advisors LLC
Source: Bloomberg
Data is as of 9/30/16 and is provided for illustrative purposes only. Market information shown (such as that of the S&P 500 Index and S&P 500 Quality Index) is inclusive of reinvestment of dividends and
shows relative market performance for the periods indicated. Market index information shown is based on widely available information believed to be reliable; however, Barrow Street makes no guarantee
or warranty hereby as to the completeness or accuracy of such data. Information herein should not be construed as an offer to sell, or a solicitation of an offer to buy, an interest in any funds or accounts
managed by BSA or as a recommendation for or against any security or financial product. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE PERFORMANCE.
Every investment involves the risk of loss. Please see the last page of this presentation for additional important disclosures.
Page 7
Historical Value Overview
Barrow Street Advisors LLC
Barrow Street Advisors LLC
S&P 500 Value Index Overview
S&P 500 Pure Value Index: Designed to track stocks in the S&P 500 that
exhibit the strongest value characteristics using a style attractiveness-weighting
scheme
Construction Methodology
Universe
Members of S&P 500 with strongest value characteristics
Constituent
Selection
Securities are selected for index by a value score. The score is based
on a composite of each stock’s ratio of price to book value, price to
earnings, and sales to price
Components are weighted according to their value score
Weighting
Barrow Street Advisors LLC
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Barrow Street Advisors LLC
Rolling 3-Year Value Returns
S&P 500 Pure Value Index – S&P 500 Index
Relative Rolling 3-Year Returns
(6/95 – 9/16)
170.00% 170%
S&P 500 Index greatly
outperforms S&P 500 Pure Value
S&P 500 Index Outperforms S&P 500 Quality Index IndexLeading leading
to tech bubble
Up to Tup
ech Bubble S&P High Quality -­‐ S&P 500 S&P
500 Index
Rolling 3-­‐Years outperforms
S&P 500 Pure Value Index
S&P 500 Index Outperforms S&P 500 Quality Index Leading Up leading
to the Financial Crisis up to financial crisis
12/31/94 -­‐ Present S&P 500 Index outperforms
S&P 500 Pure Value Index
S&P 500 Index Outperforms S&P 500 Quality Index Leading Up over theto...last
three years
120.00% 120%
Average 3-­‐Year Rolling Outperformance = 13.20% 70%
70.00% 20.00% 20%
-80%
-­‐80.00% 6/98 9/98 12/98 3/99 6/99 9/99 12/99 3/00 6/00 9/00 12/00 3/01 6/01 9/01 12/01 3/02 6/02 9/02 12/02 3/03 6/03 9/03 12/03 3/04 6/04 9/04 12/04 3/05 6/05 9/05 12/05 3/06 6/06 9/06 12/06 3/07 6/07 9/07 12/07 3/08 6/08 9/08 12/08 3/09 6/09 9/09 12/09 3/10 6/10 9/10 12/10 3/11 6/11 9/11 12/11 3/12 6/12 9/12 12/12 3/13 6/13 9/13 12/13 3/14 6/14 9/14 12/14 3/15 6/15 9/15 12/15 3/16 6/16 9/16 -­‐30.00% -30%
6/98 12/98 12/99
12/00
12/01
12/02
12/03
12/04
12/05
12/06
12/07
12/08
12/09
S&P 500 Pure Value Index -­‐ S&P 500 Index 12/10
12/11
12/12
12/13
12/14
12/15
9/16
S&P 500 Pure Value Index minus S&P 500 Index
Barrow Street Advisors LLC
Source: Bloomberg
Data is as of 9/30/16 and is provided for illustrative purposes only. Market information shown (such as that of the S&P 500 Index and S&P 500 Pure Value Index) is inclusive of reinvestment of dividends
and shows relative market performance for the periods indicated. Market index information shown is based on widely available information believed to be reliable; however, Barrow Street makes no guarantee
or warranty hereby as to the completeness or accuracy of such data. Information herein should not be construed as an offer to sell, or a solicitation of an offer to buy, an interest in any funds or accounts
managed by BSA or as a recommendation for or against any security or financial product. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE PERFORMANCE.
Every investment involves the risk of loss. Please see the last page of this presentation for additional important disclosures.
Page 10
Barrow Street Advisors LLC
Rolling 3-Year Value Returns
S&P 500 Pure Value Index Returns Outperform the S&P 500 Index
in 67% of 3-Year Rolling Periods
(6/95 – 9/16, measured monthly)
S&P 500 Pure Value Index
250%
-100%
200%
Outperform
150%
Underperform
100%
50%
-50%
0%
-50%
0%
50%
100%
150%
200%
S&P 500 Index
-100%
Barrow Street Advisors LLC
Data is as of 9/30/16 and is provided for illustrative purposes only. Market information shown (such as that of the S&P 500 Index and S&P 500 Pure Value Index) is inclusive of reinvestment of dividends
and shows relative market performance for the periods indicated. Market index information shown is based on widely available information believed to be reliable; however, Barrow Street makes no guarantee
or warranty hereby as to the completeness or accuracy of such data. Information herein should not be construed as an offer to sell, or a solicitation of an offer to buy, an interest in any funds or accounts
managed by BSA or as a recommendation for or against any security or financial product. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE PERFORMANCE.
Every investment involves the risk of loss. Please see the last page of this presentation for additional important disclosures.
Page 11
Barrow Street Advisors LLC
Historical Relative Value Returns
S&P 500 Pure Value Index NAV/S&P 500 Index NAV
Relative Wealth Chart
(6/95 – 9/16)
1.95
1.75
1.55
1.35
The S&P 500 Pure
Value Index greatly
underperforms leading
up to the Tech Bubble
Since the S&P 500 Pure
Value Index rolled over in
April 2014 it has continued to
underperform the S&P 500
through the present
The S&P Pure Value
Index underperforms the
S&P 500 Index during the
financial crisis
From mid-2000 until
mid-2007 the S&P Pure
Value Index outperforms
the S&P 500 Index
1.15
1.95
1.75
1.55
6/95
12/96
12/97
12/98
12/99
12/00
12/01
12/02
12/03
12/04
12/05
12/06
12/07
12/08
12/09
12/10
12/11
12/12
12/13
12/14
12/15 9/16
S&P 500 Pure Value Index/S&P 500 Index
Line Trending Up = Outperformance
Line Trending Down = Underperformance
Barrow Street Advisors LLC
Data is as of 9/30/16 and is provided for illustrative purposes only. Market information shown (such as that of the S&P 500 Index and S&P 500 Pure Value Index) is inclusive of reinvestment of dividends
and shows relative market performance for the periods indicated. Market index information shown is based on widely available information believed to be reliable; however, Barrow Street makes no guarantee
or warranty hereby as to the completeness or accuracy of such data. Information herein should not be construed as an offer to sell, or a solicitation of an offer to buy, an interest in any funds or accounts
managed by BSA or as a recommendation for or against any security or financial product. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE PERFORMANCE.
Every investment involves the risk of loss. Please see the last page of this presentation for additional important disclosures.
Page 12
Barrow Street Advisors LLC
For further details or information please contact
Barrow Street Advisors:
[email protected]
(203) 391-6100
barrowstreetadvisors.com
Disclosures
This presentation does not constitute investment advice or an offer to sell or buy any securities, and are intended for informational purposes only.
These materials are confidential, are intended solely for the information of the person to whom it was intended and may not be republished or redistributed, in whole or in part, to any third parties.
Past performance is no guarantee of future results and every investment may lose money. The performance discussed in this presentation reflects a relatively short time period which may not be
representative of future performance. No guarantees or assurances are or can be made as to performance.
This presentation contains forward-looking statements within the meaning of the federal securities laws. Such forward-looking statements are inherently uncertain, because the matters they describe
are subject to known (and unknown) risks, uncertainties and other unpredictable factors, many of which are beyond Barrow Street Advisors, LLC’s control. Actual results could and likely will differ,
sometimes materially, from those projected or anticipated. We are not undertaking any obligation to update or revise any forward looking statements whether as a result of new information, future
events or otherwise. You should not take any statements regarding past trends as a representation those trends or activities will continue in the future.
All data presented in this presentation was prepared by Barrow Street Advisors, LLC using information we believe to be correct at the time of production, but may be subject to revision and/or
adjustment. Information we use may be internally derived or may come from outside sources including, but not limited to, Morgan Stanley, Jefferies, Bloomberg and Yahoo Finance.
Market indices are included in this report only as context reflecting general market results during the period and should not be considered a comparable benchmark. Accordingly, no representation
is made that the performance or volatility of the Fund will track or otherwise reflect any particular index. The S&P 500® Total Return Index is an index of 500 stocks chosen for market size, liquidity,
and industry grouping, among other factors, and is designed to be a leading indicator of the risk/return characteristics of the U.S. large cap equity universe.
Barrow Street Advisors LLC
Page 13