Equity Investment Corporation

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LARGE-CAP PERFORMANCE

Large-Cap Disclosures

Equity Investment Corporation (EIC) is an SEC registered independent investment advisor incorporated in the state of Georgia. Effective October 1, 2016, ownership of the firm transferred from Jim Barksdale, who founded the firm in 1986, to three members of the investment team who collectively have more than 40 years of experience at EIC. Accounts will continue to be managed using the same investment process. Performance numbers are the value-weighted, time-weighted, total return composite results of fully discretionary large-cap value wrap fee (SMA) accounts managed in the style of the firm’s traditional value methodology with a large-cap bias. The strategy employs a flexible framework of investing in high quality, well managed companies, while at the same time avoiding those that look inexpensive relative to their historical record but are actually in structural decline. Prior to January 1, 2013, the composite was called the Large-Cap Value Wrap Composite. Returns are generally presented net of foreign withholding taxes on dividends, interest income, and capital gains; however, returns for some accounts are presented gross of foreign taxes depending on the treatment by their custodian. The composite creation date is January 1, 2001, and SMA accounts comprise 100% of the composite. SMA accounts pay an all-inclusive fee based on a percentage of assets under management. Other than brokerage commissions, this fee includes portfolio monitoring, consulting services, and in some cases, custodial fees. For comparison purposes the composite is measured against the Russell 1000® Value Index, which excludes an advisory fee. On January 1, 2003 the benchmark was changed retroactively from the S&P 500® Index to the Russell 1000® Value Index which is more representative of the composite. The Russell 1000® Value Index measures the performance of the large-cap value segment of the US equity universe. It is the portion of the Russell 1000® Index companies with lower price-to-book ratios and lower expected growth values. The Russell 1000® Index includes approximately 1000 of the largest US companies and represents 90% of the US equity market.

The following is presented for informational purposes:

Year Ended
Dec - 31

Gross Rate of Return Hypothetical (3% Annual) Net Rate of Return Benchmark Return of Russell Midcap Value Index Composite 3-Yr St Dev Benchmark 3-Yr St Dev Dispersion of Annual Returns (Standard Deviation) Number of Portfolios Composite Assets at ($ mm) UMA Assets ($ Millions) Total Firm Assets ($ Millions) Total ($ Millions)
2016 11.9% 8.6% 17.3% 8.5% 10.8% 0.5% 938 $289.0 $2,044.5 $2,994.4 $5,038.9
2015 -4.5% -7.3% -3.8% 8.9% 10.7% 0.4% 1146 $318.5 $1,590.0 $3,658.9 $5,248.9
2014 15.0% 11.6% 13.5% 8.1% 9.2% 0.5% 361 $159.4 $1,657.7 $3,862.6 $5,520.3
2013 24.8% 21.2% 32.5% 9.4% 12.7% 0.5% 863 $328.7 $1,009.2 $3,286.3 $4,295.5
2012 10.0% 6.8% 17.5% 11.5% 15.5% 0.3% 658 $197.2 $665.6 $2,301.1 $2,966.7
2011 8.2% 5.0% 0.4% 15.9% 20.7% 0.3% 465 $130.1 $314.5 $1,127.9 $1,442.4
2010 16.8% 13.4% 15.5% 18.5% 23.2% 0.4% 409 $98.2 $77.9 $836.9 $914.8
2009 25.0% 21.4% 19.7% 17.2% 21.1% 1.0% 386 $80.0 $10.5 $541.2 $551.7
2008 -22.8% -25.2% -36.9% 12.1% 15.4% N/A 3 $0.9 $0.0 $362.6 $362.6
2007 2.1% -0.9% -0.2% 6.9% 8.1% N/A 3 $1.1 $0.0 $448.1 $448.1
2006 17.7% 14.3% 22.3% 6.0% 6.7% N/A 3 $1.0 $0.0 $487.2 $487.2
2005 5.7% 2.6% 7.1% 8.7% 9.5% 0.4% 18 $9.3 $0.0 $463.6 $463.6
2004 13.1% 9.8% 16.5% 12.7% 14.8% 0.4% 18 $8.9 $0.0 $388.1 $388.1
2003 23.3% 19.7% 30.0% 14.2% 16.0% 1.1% 21 $8.5 $0.0 $231.0 $231.0
2002 -9.0% -11.7% -15.5% N/A N/A 0.5% 42 $11.0 $0.0 $110.7 $110.7
2001 14.6% 11.3% -5.6% N/A N/A 1.2% 45 $12.4 $0.0 $82.2 $82.2

*”Total Assets” include our regulatory assets under management (“GIPS® Firm Assets”) and our advisory-only “UMA Assets”. EIC has no trading discretion for UMA accounts and provides a model portfolio to the program sponsor or overlay manager. The “UMA Assets” and “Total Assets ” amounts are shown as supplemental information.

1 Dispersion is an asset-weighted standard deviation for the accounts in the composite the entire year (or year-to-date).

2 Results include SMA accounts and gross returns are shown as supplemental information. Gross returns for SMA accounts are stated gross of all fees and transactions costs; net returns are simulated by reducing gross returns of the composite by an annual SMA fee of 3.0% (0.75%/quarter during 2001 and 0.25%/month thereafter).

3 Number of Portfolios/Composite Assets significantly decreased in Q4, 2014 and Q4, 2016 due to transitioning of two major SMA programs to model based (UMA) programs.

N/A – Information is not statistically meaningful due to an insufficient number of portfolios in the composite for the entire year.

Additional Note: The three year annualized standard deviation measures variability of the composite (gross of fees) and the benchmark returns over the preceding 36 month period.

 

Performance has been measured on a monthly basis from January 1, 2001, to present. Periods are geometrically linked to obtain the quarterly and annual results. Eligible new accounts are added to the composite at the beginning of the first full quarter under EIC management. Trade date accounting with monthly valuations and adjustments for large cash flows are used. Results are based on fully discretionary accounts under management, including those accounts no longer with the firm. The US Dollar is the currency used to express performance. Returns include the reinvestment of all income. During 2002, 2% of the assets are non-fee paying accounts. There are no non-fee paying accounts during any other period. Economic and market conditions have differed over the time period displayed, and likewise will be different in the future. Policies for valuing portfolios, calculating performance and preparing compliant presentations are available upon request.

Equity Investment Corporation (EIC) claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS® standards. EIC has been independently verified for the periods January 1, 1986, through September 30, 2016. Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS® standards on a firm-wide basis and (2) the firm’s policies and procedures are designed to calculate and present performance in compliance with the GIPS® standards. The Large-Cap Value SMA composite has been examined for the periods January 1, 2001, through September 30, 2016. The verification and composite examination reports, as well as a complete list and description of all the firm’s composites, are available upon request by contacting Equity Investment Corporation, 3007 Piedmont Road NE, Suite 200, Atlanta, GA 30305. Prospective clients should be aware that results are historical and do not imply future rates of return or volatility for EIC or the indices, which may be materially different from the past and from each other.

Investment management fees are based on market values of the assets under management. EIC’s maximum annual fees for SMA accounts (charged quarterly) are 0.75%. Total fees charged may equal 3% per year. SMA schedules are provided by independent SMA sponsors and are available upon request from the individual sponsor. Further information about fees and compensation is discussed in EIC’s form ADV Part 2 (www.adviserinfo.sec.gov).

⁴ Frank Russell Company is the source and owner of the Russell Index data contained or reflected in this material and all trademarks and copyrights related thereto. This is a presentation of EIC. The presentation may contain confidential information and unauthorized use, disclosure, copying, dissemination or redistribution is strictly prohibited. Frank Russell Company is not responsible for the formatting or configuration of this material or for any inaccuracy in EIC’s presentation thereof. S&P 500® Index and Russell Index information is sourced from S&P Capital IQ.

GIPS® is a registered trademark of CFA Institute. CFA Institute has not been involved in the preparation or review of this report/advertisement.