Brendan M. Clark, CFA®, President
The Client Comes First
Building a Better Partnership to Deliver a More Rewarding Client Experience
1. The Clark Capital Case Design:
Personalized Planning Meets Tailored Investment Management
Understand Objectives, Align Efforts, and Accomplish Goals
We believe that everyone involved in the financial planning process should have a clear understanding of the client’s goals and current financial circumstances. The goal of the case design process is to ensure alignment between the investment plan and the financial plan to accomplish the client’s goals.
It all starts with a goals-based investment questionnaire, designed to ask the right questions that will assist us in aligning the investment plan with the financial plan. Once we have gathered critical information about your client’s financial status, values, and goals, we will schedule a case design call.
The case design call is a client-centered conversation between you and your Clark Capital Investment Consultant. It is designed to help you gather and discuss all relevant information that could impact the investment plan. The case design centers attention on the client and their needs. In certain cases, it may be helpful to include the client in the conversation.
The case design process aligns our strategies with your clients’ unique needs and goals and prepares us to make recommendations via our proposal.
2. The Personalized UMA:
The Next Generation in Unified Managed Accounts
Introducing the Personal UMA (PUMA®) — Personally tailored UMAs designed to help you address your clients’ unique needs — all in one account.
Since 2007, Clark Capital has offered Unified Managed Accounts (UMAs), designed to offer meaningful diversification through the combination of multiple investment methodologies and asset classes within one brokerage account. We believe that we were one of the first firms to offer a truly diversified, multi-asset class strategy in a truly risk-based format. But developing product and trying to fit it to the client doesn’t meet the unique needs of every client. Walking through the case design process, we recognized we needed to collaborate with our Partner advisors to custom tailor a unique investment plan to support the financial plan. The Personal UMA is the next generation UMA. While constructing a PUMA®, we consider liquidity needs, tax circumstances, individual preferences and other factors affecting your clients.
The PUMA® will allow you to work with your Investment Consultant with the goal of handpicking the most appropriate individual Clark Capital strategies for your client and combining them into a single account.
To support the PUMA®, we have introduced an enhanced proposal system with personal benchmarks, portfolio customization, and a focus squarely on the client.
3. Client-Centered Proposal System:
You Asked and We Listened: Personal Benchmarks and Blended Benchmarks
We’ve made our investment proposal less about product and more about the client. It gives clients a proposal that lines up very easily with the financial plan in a seamless household view of the performance and risk characteristics, complete with a personal benchmark defined by you and the client. The investment proposal delivers comprehensive household snapshots to your clients for a simplified, personalized financial outlook.
The proposal can be branded with your logo, and it clearly defines your role, Clark Capital’s role, and the client’s role in the investment planning process.
The fee addendum included with the proposal lists each of the strategies within the investment plan and bundles the fee for the entire household in one easy picture. The new proposal helps keep the conversation focused squarely on the client and their unique objectives.
Enhancements to your Outsourced CIO Team and Your Investment Offerings
1. New Navigator Mutual Fund Strategies:
Expanding Our Offerings to Help You Navigate the Ever-Changing Global Capital Markets
Navigator® Sentry Managed Volatility Fund — Embrace Volatility in a Fund Format
Clark Capital targets risk management and volatility control across its strategies. Since 2003, the firm has managed volatility as an asset class believing this can provide a more consistent return stream for clients. Coming out of the bear market in the early 2000s, we recognized that traditional diversification, while essential for portfolio construction, had shortcomings.
We watched as asset class correlations converged and diversification broke down during market downturns, just when clients needed the benefits of diversification most. Over 10 years ago, we introduced the Sentry strategy as a way to attempt to combat the destructive effects of volatility by embracing it. By building volatility into a portfolio, we believed we could use it to clients’ advantage.
You may recall that during the bear market of 2008-2009, clients in all-equity portfolios that were hedged with the Navigator Sentry strategy suffered less than half the decline of the overall markets. We believe that the Sentry strategy was able to significantly mitigate portfolio losses, with an overall goal of keeping your clients invested in the markets and on track to reach their financial goals.
We have continually made enhancements to increase the efficacy and cost control of the strategy. With the introduction of the Navigator Managed Volatility Fund, clients will access our hedging strategy through a 40 Act Fund.
Potential Benefits to Your Clients
- A more efficient hedge and less drag
- We believe we will be able to deliver a more efficient hedge for different market regimes, including
bull and bear markets.
- The fund format allows us to customize the hedge allocation through an expanded universe of
hedging vehicles including ETFs, options, structured notes, and swaps.
- The fund format allows us to reduce the allocation to the hedge by approximately one third. As a
result, more money can be invested in the long portion of the portfolio in an effort to reduce drag
in up markets. Additionally, any excess cash within the fund can be invested in alpha-generating
strategies with the goal of lowering the drag.
Logistics & Funding
- We will be rebalancing UMA and Global Balanced portfolios back to target weightings during
the last week of February. At this time, we will replace the current volatility ETP exposure in the
portfolios with the Navigator Sentry Managed Volatility Fund.
Navigator Tactical Fixed Income Fund — A Flexible Approach to the Search for Yield
Since 2005, Clark Capital has provided a flexible and opportunistic fixed income strategy through the Navigator Fixed Income Total Return Strategy. The strategy has been consistently ranked at the top of its Morningstar peer group and delivers risk management with a goal of total return.
Although interest rates rose in 2013, we find them to still be near historic lows. As we move into a potentially rising rate environment, we believe it will be even more important to control risk through nontraditional fixed income approaches.
The Navigator Tactical Fixed Income Fund offers the same philosophy, approach and process as the Navigator Fixed Income Total Return SMA within a 40 Act Fund.
Benefits to Your Clients
- Goal of added flexibility and better trading execution
- The mutual fund provides access to a larger investable universe and we believe this will allow for more flexibility and better, or more precise, exposure to our favored fixed income sector(s). The investable universe for the fund will include: mutual funds, individual bonds, ETFs and synthetic vehicles such as credit default swaps and credit default indexes (CDX).
- We believe the fund format will provide better liquidity and trading execution. The mutual funds we currently hold in the strategy invest in individual bond securities as well as synthetics and other securities. Essentially, we are bringing that flexibility in-house.
Logistics and Funding
- Navigator® Fixed Income Total Return stand-alone separately managed accounts will remain as
they are. Within the UMA and Global Balanced portfolios, we will replace the existing Fixed
Income Total Return allocation with the Navigator® Tactical Fixed Income fund during the last
week of March.
Navigator Duration Neutral Fund — A Nontraditional Strategy for Today’s Fixed Income Realities
The Navigator Duration Neutral Fund is a non-traditional bond fund that offers investors opportunistic exposure to the municipal markets with a minimized interest rate risk profile. Hedging interest rate exposure enables us to focus on identifying deeply undervalued issues in an effort to exploit supply and demand inefficiencies and credit spread trends between credit qualities.
“The Navigator Duration Neutral Bond Fund complements our existing fixed income strategies and allows us to offer a product designed to succeed in any interest rate environment.”
— Harry Clark, Chairman and CEO
For the last 30 years, fixed income has been in a bull market as interest rates have steadily declined. We believe investors have become conditioned to expecting bonds to provide risk mitigation, capital appreciation and income. As the bull market for bonds comes to an end, the added benefit of capital appreciation may end with it. Fixed income may revert to its historical benefits — risk mitigation and income. Over the next decade, as a result of rising interest rates, we believe investors may see portfolio valuation decreases in their bond portfolios. In a rising rate environment, this strategy seeks to minimize the risks of interest rates rising and can potentially protect investors’ capital.
We believe that flexible fixed income strategies will be key to maintaining the diversification benefits of fixed income while mitigating the potential pitfalls of a rising rate environment. The ability to both buy and sell bonds can help capture positive returns across the municipal space without taking undue risk.
2. Portfolio Management Team Enhancements:
Premier Portfolios —New Team Member and Additional Strategies
Tony Soslow, CFA has joined the Portfolio Management Team. He brings with him time-tested domestic and global equity strategies that will enhance our capabilities in helping you navigate all phases of the client investment life cycle. Tony’s growth-oriented equity strategies may be able to help your clients reach their long-term goals.
“We are very excited that Tony has joined the team. We believe his wealth of experience, depth of expertise and investment track record complements our well-seasoned and diligent group of portfolio managers. His addition highlights our continued commitment to providing innovative investment solutions and world class service to our advisor partners and clients.”
— K. Sean Clark, CFA, Chief Investment Officer
Tony has over 25 years of portfolio management experience utilizing both a quantitative and fundamental process. From 1997 to 2013, Tony was the President and Chief Investment Officer of Global Capital Management which he founded. He was cited as a Top Guns Manager in 2006 and 2007 and was named Manager of the Decade in 2011 by PSN. In addition to being a member of the Clark Capital Investment Committee, Tony manages the following strategies:
- Navigator® All Cap U.S. Equity
- Navigator® All Cap U.S. Equity Hedged
- Navigator SMID Cap U.S. Equity
- Navigator® Small Cap U.S. Equit
- Navigator® International Equity/ADR
These strategies fall within the Premier Solutions and complement our High Dividend Equity, Taxable Bond and Tax Free Bond strategies. They are available for incorporation into a proposal today.
Effective April 1st, we will be reducing fees on Navigator® Unified Solution and Navigator® Global Balanced portfolios, since they will incorporate our Navigator® Sentry Managed Volatility Fund and Navigator® Tactical Fixed Income Fund. The fees will be adjusted downward to compensate for the mutual fund internal expenses. Across the board, the net result will be a reduction in total expense to the client and will be revenue neutral for Clark Capital in the aggregate.
We are very excited about these new initiatives and the value we believe they bring to our partner advisors and their clients. We look forward to scheduling time with you personally to discuss these enhancements.
“As a boutique investment manager, Clark Capital focuses on helping each and every one of our partners succeed. We believe these additional tools will help you simplify the conversation with the client, and in turn, deliver a better client experience.”
—Brendan M. Clark, CFA®, President
|Personalized UMA||April 1st|
|Proposal System||March 1st|
|Navigator® Sentry Managed Volatility Fund||Early March|
|Navigator® Tactical Fixed Income Fund||Late March|
|Navigator® Duration Neutral Fund||Available|
|Expanded Premier Solutions||Available|
|Website Redesign / Blog||Available|
We hope this Partner Outlook conveys Clark Capital’s commitment to you and your clients. Clark Capital is committed to providing investment solutions that support your financial planning efforts so that you can focus on your most valuable role: understanding your clients’ needs and helping them achieve financial security.
Clark Capital’s collaborative investment planning process is designed to help you grow your business faster while increasing client satisfaction. This guide introduces several initiatives and new products designed to reinforce your role as trusted advisor and help you build a more rewarding practice.
In the coming months, Clark Capital and your Investment Consultant team will offer training and guidance. To schedule an appointment to learn more about any one of the following initiatives, please call us.
We value your continued partnership and share in your pledge to deliver personalized guidance and superior service to your clients. Together, we can help clients as they reach for successful outcomes.
The opinions expressed are those of Clark Capital Management Group’s Investment Team. The opinions referenced are as of the date of publication and are subject to change due to changes in the market or economic conditions and may not necessarily come to pass. There is no guarantee of the future performance of any Clark Capital investments portfolio. Material presented has been derived from sources considered to be reliable, but the accuracy and completeness cannot be guaranteed. Nothing herein should be construed as a solicitation, recommendation or an offer to buy, sell or hold any securities, other investments or to adopt any investment strategy or strategies. For educational use only. This information is not intended to serve as investment advice. This material is not to be relied upon as a forecast or research. The investment strategy discussed may not be suitable for all investors. Investors must make their own decisions based on their specific investment objectives and financial circumstances. Past performance does not guarantee future results.
Clark Capital Management Group, Inc. (Clark Capital) is an investment advisor registered with the United States Securities and Exchange Commission under the Investment Advisors Act of 1940, as amended. Registration does not imply a certain level of skill or training. Clark Capital is a closely held, mostly employee owned C Corporation with all significant owners currently employed by the firm in key management capacities. The firm specializes in managing equity and fixed income portfolios for individuals and institutions. More information about Clark Capital’s advisory services and fees can be found in its Form ADV which is available upon request.
Disclosure related to the recognition as a Top Guns Manager of the Decade: Top Guns Manager of the Decade is a recognition from Informa Investment Solutions PSN, an independent, national money manager database. This designation may not be representative of any one client’s experience because the rating reflects an average of all, or a sample of all, the experiences of Mr. Soslow’s GCM clients. This information does not reflect the experience of clients of Clark Capital Management Group, Inc. and is not indicative of future performance. For the periods when the designation was made, the recognition was for the GCM All Cap Core strategy managed by Mr. Soslow. Though the strategy was in the top ten, it was not ranked first in the top ten category for each period.
The PSN All Cap universe is comprised of 356 firms and 509 products. Criteria: The PSN universes were created using the information collected through the PSN investment manager questionnaire and use only gross of fee returns. Mutual fund and commingled fund products are not included in the universe. 2011 recognition: PSN evaluated all large cap core managers for performance and risk over the 10-year period ended December 31, 2011. The top 10 are recognized for their ability to significantly outperform the S&P 500 Index without taking on excess risk, while maintaining a high correlation to the benchmark. Products must have an R-Squared of 0.80 or greater relative to the style benchmark for the ten year period ending DECEMBER 31, 2011. Moreover, products must have returns greater than the style benchmark for the ten year period ending DECEMBER 31, 2011 and also Standard Deviation less than the style benchmark for the ten year period ending DECEMBER 31, 2011. At this point, the top ten performers for the latest 10 year period ending DECEMBER 31, 2011 become the PSN Top Guns Manager of the Decade. 2007 recognition: Products must have an R-Squared of 0.80 or greater relative to the style benchmark for a five year period ending December 31, 2007. Moreover, products must have returns greater than the style benchmark for the three latest three-year rolling periods ending December 31, 2007. At this point, the top ten performers for the latest 3 year period become the 4 STAR TOP GUNS. Products are then selected which have a standard deviation for the five year period equal or less than the median standard deviation for the peer group. The top ten performers for the latest 3 year period become the 5 STAR TOP GUNS. The top ten information ratios for the latest five-year period ending December 31, 2007 then become the 6 STAR TOP GUN. 2006 recognition: Products must have an R-Squared of 0.80 or greater relative to the style benchmark for a five year period ending September 30, 2006. Moreover, products must have returns greater than the style benchmark for the three latest three-year rolling periods ending September 30, 2006. After that we select only the products which standard deviation or the five year period is equal or less than the median standard deviation for the peer group. The Top ten performers for the latest 3 year period became the 4 STAR TOP GUNS. The top ten information ratios for the latest five-year period ending September 30, 2006 then become the 5 STAR TOP GUNS.