RISK-AVERSE PHILOSOPHY
NFJ adheres to a strict value philosophy, seeking undervalued, fundamentally sound companies. What sets the firm apart from other value-oriented managers is its emphasis on risk control. To temper the risks associated with equity investing, NFJ maintains broad industry diversification and requires that each stock in its International Value portfolios pay a dividend-a characteristic they believe is an important sign of financial stability.
DISCIPLINED INVESTMENT PROCESS
NFJ's investment process enables it to identify international stocks offering attractive valuations and long-term growth potential. At the same time, the process seeks to control total portfolio risk.
BUILDING THE PORTFOLIO
NFJ follows a disciplined process to identify the most attractive stocks.
- Screen approximately 600 ADRs of $1 billion and above, and classify into approximately 100 industries.
- Using fundamental research, select one candidate from each industry that has a low price-to-earnings ratio (P/E) for that industry and pays a dividend.
- Rank candidate stocks by P/E (low to high) and select 40-50 stocks.
- Determine weightings (between 1%-4% at time of investment) by value factors such as low P/E, high yield, low price-to-book, and price momentum.
- Continually repeat the research process to identify new buy and sell candidates. Sell a stock when an alternative stock with equally strong fundamentals demonstrates a substantially lower P/E ratio and/or a substantially higher dividend yield.
|
