Global Large-Cap Rising Dividend

Quantitative Equity

Investment Strategy

Denver Investments’ Global Large-Cap Rising Dividend strategy is based on the belief that the market rewards companies over time for their free cash flow rather than their reported earnings. The strategy utilizes a bottom-up approach grounded in independent fundamental research. Analysts seek to invest in high-quality, dividend-paying companies with the potential to grow their dividend streams over time. The team constructs a portfolio of 25-30 stocks designed to generate alpha primarily through security selection.

Portfolio Management

We build this portfolio with the goal of helping investors preserve their capital while also growing income over time. – Alex A. Ruehle, CFA

Derek R. Anguilm, CFA

Derek R. Anguilm, CFA

Partner, Co-Director of Value Research, Portfolio Manager

Troy Dayton, CFA

Troy Dayton, CFA

Partner, Co-Director of Value Research, Portfolio Manager

Mark M. Adelmann, CFA, CPA

Mark M. Adelmann, CFA, CPA

Partner, Portfolio Manager, Analyst

Lisa Z. Ramirez, CFA

Lisa Z. Ramirez, CFA

Partner, Portfolio Manager, Analyst

Paul A. Kuppinger, CFA

Paul A. Kuppinger, CFA

Vice President, Portfolio Manager, Quantitative Analyst

Alex A. Ruehle, CFA

Alex A. Ruehle, CFA

Partner, Portfolio Manager, Analyst

Portfolio Construction Guidelines:

  • Approximately 25-30 stocks
  • Stocks with minimum market cap of $5 billion
  • Initial position sizes equally weighted
  • Sector sensitive: +/- 15% of the absolute sector weight of the benchmark
  • Fully invested: typically less than 5% cash
Benchmark:

Russell Developed Large Cap Index

Investment Minimum:

$10,000,000

See composite descriptions and index descriptions. The guidelines listed are representative of the product but are not considered restrictions. Specific client guidelines may differ.

Investment Team

Derek R. Anguilm, CFA
Derek R. Anguilm, CFA

Partner, Co-Director of Value Research, Portfolio Manager

2000 to Present: Denver Investments
1999: Everen Securities, Research Assistant
Education:

BS – Metropolitan State College of Denver
Member of CFA Institute and CFA Society Colorado

Troy Dayton, CFA
Troy Dayton, CFA

Partner, Co-Director of Value Research, Portfolio Manager

2002 to Present: Denver Investments
2001 to 2002: Jurika and Voyles, Equity Research Analyst
1998 to 2001: Dresdner RCM Global Investors, Equity Research Associate
1996 to 1998: Jurika and Voyles, Equity Research Associate
1996: Citibank, Trading Support Officer
Education:

BSBA – Colorado State University
Member of CFA Institute and CFA Society Colorado

Mark M. Adelmann, CFA, CPA
Mark M. Adelmann, CFA, CPA

Partner, Portfolio Manager, Analyst

1995 to Present: Denver Investments
1979 to 1995: Deloitte & Touche, Senior Manager
Education:

BS – Oral Roberts University
Member of CFA Institute and CFA Society Colorado
Member of the American Institute of CPAs and the Colorado Society of CPAs

Lisa Z. Ramirez, CFA
Lisa Z. Ramirez, CFA

Partner, Portfolio Manager, Analyst

1989 to Present: Denver Investments
Education:

BS – University of Colorado; MBA – Regis University
Member of CFA Institute and CFA Society Colorado

Paul A. Kuppinger, CFA
Paul A. Kuppinger, CFA

Vice President, Portfolio Manager, Quantitative Analyst

2006 to Present: Denver Investments
2003 to 2006: Rocky Mountain Wealth Advisors, Principal
2002 to 2003: Curian Capital, Vice President of Research
1998 to 2002: Prima Capital, Director of Research
1997 to 1998: KPMG, Research Analyst
1993 to 1995: Westcap Investors, Trader
1990 to 1993: Wilshire Associates, Supervisor of Performance Measurement
Education:

BA – The Colorado College; MBA – University of Colorado
Member of CFA Institute and CFA Society Colorado

Alex A. Ruehle, CFA
Alex A. Ruehle, CFA

Partner, Portfolio Manager, Analyst

2008 to Present: Denver Investments
2006 to 2007: First Western Financial Services, Inc., Intern
Education:

BS and MBA – University of Denver
Member of CFA Institute and CFA Society Colorado

Jennifer B. Oldland
Jennifer B. Oldland

Vice President, Analyst

2006 to Present: Denver Investments
Education:

BS – Colorado State University

Guangyan (Yan) Qin, CFA
Guangyan (Yan) Qin, CFA

Vice President, Analyst

2008 to Present: Denver Investments
2007: Investment Protection Services, Wealth Management Intern
2007: First Data Corporation, Treasury Analyst Intern
2005: China Construction Bank, Intern
Education:

BS – University of International Business and Economics, Beijing, China
MS – University of Denver
Member of CFA Institute and CFA Society Colorado

Robbie A. Steiner, CFA
Robbie A. Steiner, CFA

Vice President, Analyst

2014 to Present: Denver Investments
2012 to 2013: BMO Capital Markets, Investment Banking Associate
2008 to 2010: Transamerica Investments, Mutual Fund Wholesaler
Education:

BBA – University of Georgia, MBA – Emory University
Member of CFA Institute and CFA Society Colorado

Georgene L.A. Pedrie
Georgene L.A. Pedrie

Vice President, Senior Equity Trader

2002 to Present: Denver Investments
1987 to 2002: NDB Capital Market, Sales Trader
Education:

BA and MA – University of Northern Colorado

Tara Stacy
Tara Stacy

Equity Trader

2009 to Present: Denver Investments
1999 to 2009: LGC Management, Accountant
Education:

BA – University of Colorado Denver; CFA Institute Claritas certificate

Performance (%)

  Monthly Returns (%)
Periods Ended: 5/31/2017
Annualized Returns (%)
Periods Ended: 3/31/2017
1 Month 3 Months YTD 1 Year 3 Years 5 Years 10 Years
Global Large-Cap Rising Dividend (gross) 3.44 7.41 11.51 12.73 6.05 - -
Global Large-Cap Rising Dividend (net) 3.38 7.24 11.21 12.01 5.37 -
Russell Developed Large Cap 2.04 4.67 10.18 14.72 5.53 - -
Global Large-Cap Rising Dividend
Monthly Returns(%) as of 5/31/2017 Gross Net
1 Month 3.44 3.38
3 Months 7.41 7.24
YTD 11.51 11.21
Annualized Returns(%) as of 5/31/2017 Gross Net
1 Year 16.14 15.40
3 Years 6.97 6.28
5 Years - -
10 Years -
Russell Developed Large Cap
Monthly Returns(%) as of5/31/2017 Gross Net
1 Month 2.04 -
3 Months 4.67 -
YTD 10.18 -
Annualized Returns(%) as of 5/31/2017 Gross Net
1 Year 16.36 -
3 Years 5.80 -
5 Years - -
10 Years -

Calendar Year Performance (%)

2016 2015 2014 2013 2012 2011 2010 2009 2008 2007
Global Large-Cap Rising Dividend (Gross) 9.71 0.36 5.49 9.72* - - - - - -
Global Large-Cap Rising Dividend (Net) 9.01 -0.29 4.81 9.25* - - - - - -
Russell Developed Large Cap 7.7 -0.87 5.78 14.96* - - - - - -
Global Large-Cap Rising Dividend
Year Gross Net
2016 9.71 9.01
2015 0.36 -0.29
2014 5.49 4.81
2013 9.72* 9.25*
2012 - -
2011 - -
2010 - -
2009 - -
2008 - -
2007 - -
Russell Developed Large Cap
Year Gross Net
2016 7.7 -
2015 -0.87 -
2014 5.78 -
2013 14.96* -
2012 - -
2011 - -
2010 - -
2009 - -
2008 - -
2007 - -

*Data is based on the firm’s composite for this strategy. Composite inception date is 5/1/2013. 2013 calendar year and YTD returns for the product and benchmark are for the period 5/1/2013 through 12/31/2013. Past performance does not guarantee future results and future performance may be lower or higher than the performance presented, including the possibility of loss of principal. Composite returns for one year or greater are annualized.

Returns are computed and stated in U.S. dollars. Performance is calculated net of withholding taxes on foreign dividends and interest, if any, and reflect the reinvestment of dividends and other earnings.

Gross of fee returns are calculated gross of management and custodial fees and net of transaction costs. Net of fee returns are calculated net of management fees and transaction costs and gross of custodian fees. As of 1/1/15, net of fee returns were calculated by deducting the maximum applicable advisory fee in effect, pro-rated on a monthly basis. From 1/1/08 to 12/31/14, net of fee returns were calculated by deducting the maximum applicable advisory fee in effect, pro-rated on a quarterly basis. Prior to this date, net of fees returns were calculated using actual annual client fees, pro-rated on a quarterly basis.

The Russell Developed Large Cap index offers investors access to the large-cap segment of the developed equity universe. The Russell Developed Large Cap index is constructed to provide a comprehensive and unbiased barometer for the large-cap segment of this market and is completely reconstituted annually to accurately reflect the changes in the market over time. See Terms of Use for additional disclosure.

Index returns are provided to represent the investment environment existing during the time periods shown. For comparison purposes, the index is fully invested, which includes the reinvestment of dividends and capital gains. The returns for the index do not include any transaction costs, management fees or other costs. Composition of each individual portfolio may differ from securities in the corresponding benchmark index. The index is used as a performance benchmark only, as Denver Investments does not attempt to replicate an index. See composite descriptions.

Denver Investment Advisors LLC (dba Denver Investments) is an independent investment advisor registered with the Securities and Exchange Commission under the Investment Advisers Act of 1940. Denver Investments provides fundamental investment management services to various institutional and private investors and mutual funds.

Denver Investments claims compliance with the Global Investment Performance Standards (GIPS®).

See performance disclosure for a presentation that complies with the requirements of the GIPS standards. Please contact us to request a complete list and description of all firm composites.

Manager Commentary as of 3/31/2017

 

Market Overview

Global large-cap stocks continued their climb higher in the first quarter, even as market enthusiasm following the election waned, particularly in March. We witnessed a clear change in sector leadership in the quarter, as more cyclical sectors, such as energy and interest rate sensitive, underperformed in the quarter while more defensive sectors, such as medical/healthcare and consumer, were among the top-performing sectors. The energy sector’s drop coincided with West Texas Intermediate oil (a benchmark that refers to oil extracted from wells in the United States) falling 5.8% in the quarter. The top-performing sector was information technology, which showed broad-based strength driven in part by a recovery of large-cap growth stocks. Within interest rate sensitive, banks pulled back, reversing some of their fourth quarter gains. This occurred as the Federal Reserve raised rates during the quarter and suggested more near-term rate hikes might be appropriate. International stocks recovered from the pullback that was seen following the U.S. Presidential Election, as market participants reconsidered the new administration’s ability to enact protectionist trade policies. The market’s excitement around potential U.S. policy changes, such as infrastructure spending, de-regulation, and tax reform appeared to fade somewhat. At the same time, signs of an improving global economy began to take shape.

Portfolio Commentary

For the quarter, the Denver Investments’ Global Large-Cap Rising Dividend portfolio underperformed its benchmark, the Russell Developed Large-Cap Index, which returned 6.33%. Our global large-cap strategy faced headwinds in the quarter as more volatile stocks and stocks that don’t pay a dividend did well.

Contributors to Return

Those sectors that contributed most to the portfolio’s performance relative to the benchmark were the consumer staples, utilities, and materials. Specific individual top performers for the quarter were led by CSX Corp., a provider of rail-based transportation services in the United States. Its solid performance was driven by new CEO, E. Hunter Harrison, an industry veteran skilled in precision scheduled railroading, taking the helm. Under Mr. Harrison's leadership and with his proven operating efficiency programs, expectations for operating ratio improvements, and thus improving cash flow and returns, have increased beyond original expectations. Mobile device and personal computer manufacturer Apple Inc. added to performance with a better-than-expected quarterly report. Its record results were attributable to strong iPhone and services sales, while improved expectations for the iPhone 8 product cycle helped support the move higher. Kimberly-Clark Corp., a paper-based products and cleaning solutions manufacturer, contributed to performance during the quarter. During the period, the company announced results that exceeded expectations despite effectively flat commodities, which was attributed to its sustainable cost savings program. We believe the company can continue to power through a challenging macroeconomic environment with the help of its increasingly robust cost savings platform.

Detractors from Return

The portfolio’s most significant detractors relative to its benchmark in the quarter were the consumer discretionary, information technology, and telecommunication services sectors. QUALCOMM Inc., a provider of digital telecommunications products and services, was negatively impacted in the quarter following complaints issued in China alleging monopolistic practices and leading to a review of patent royalty terms. Despite the recent complaints, we believe in the durability of QUALCOMM's royalties base, which, coupled with its recent diversification into growing markets, should support future sustainable dividend growth. Exploration and production company Occidental Petroleum Corp. provided a headwind to the portfolio’s performance during the quarter. Oil prices dropped with the normal seasonal inventory build-up in the United States and the associated inventory boost from importers stocking up on OPEC crude prior to its production cuts. We believe we are entering the early innings of a global inventory rebalance that started in January and think that Occidental’s onshore program will prove to be rewarding. Within the consumer discretionary sector, Toyota Motor Corp. was the portfolio’s most significant detractor. Numerous concerns weighed on the stock including peaking auto sales volumes in the United States, increased competition, falling used car prices, and concerns over potential trade policies under the new administration. While we do acknowledge the potential for flat to slowing auto demand in the United States, we believe Toyota’s globally balanced portfolio should support strong cash flows that could be returned to shareholders through dividend growth.

Outlook and Positioning

We believe uncertainty regarding the outlook for domestic and global economic growth will continue and that concerns around successful policy implementation will remain heightened. The uncertainty has resulted in a wavering of the post-election market euphoria, as questions regarding economic growth and policy changes remain unanswered. This, coupled with historically high valuations, in our opinion is a recipe for continued volatility. In this type of environment, we believe any company-specific disappointments are likely to be severely and often overly punished. This would create near-term pain, but also may offer opportunities to invest in companies at prices below what we believe they are worth.



Stock Performance (3 months ended 3/31/2017)
Top 5 Stocks Average Weight Contribution to Return
CSX Corporation 3.96% 1.00%
Apple Inc. 3.75 0.84
British American Tobacco PLC Sponsored ADR 3.51 0.67
Lowe's Companies, Inc. 3.40 0.52
Kimberly-Clark Corporation 3.20 0.49
Bottom 5 Stocks Average Weight Contribution to Return
Brambles Limited 2.87% -0.65%
QUALCOMM Incorporated 2.95 -0.39
BT Group plc 2.65 -0.37
Occidental Petroleum Corporation 2.74 -0.30
Toyota Motor Corp. 3.11 -0.23
Top 5 Stocks
CSX Corporation
Average Weight 3.96%
Contribution to Return 1.00%
Apple Inc.
Average Weight 3.75
Contribution to Return 0.84
British American Tobacco PLC Sponsored ADR
Average Weight 3.51
Contribution to Return 0.67
Lowe's Companies, Inc.
Average Weight 3.40
Contribution to Return 0.52
Kimberly-Clark Corporation
Average Weight 3.20
Contribution to Return 0.49
Bottom 5 Stocks
Brambles Limited
Average Weight 2.87%
Contribution to Return -0.65%
QUALCOMM Incorporated
Average Weight 2.95
Contribution to Return -0.39
BT Group plc
Average Weight 2.65
Contribution to Return -0.37
Occidental Petroleum Corporation
Average Weight 2.74
Contribution to Return -0.30
Toyota Motor Corp.
Average Weight 3.11
Contribution to Return -0.23

The performance data quoted represents past performance and does not guarantee future results. Current performance may be lower or higher than the performance data quoted. Investment return and principal value will vary, and initial investments may be worth more or less than their original investment. To obtain current performance as of the most recent month-end and for important performance disclosures, please view the fact sheet.

The securities identified on this chart were determined after consistently calculating the weight of each holding in the representative account multiplied by the rate of return for that holding during the period. The securities identified do not represent all of the securities purchased, sold or recommended for advisory clients. You may obtain a complete list showing the contribution of each holding in the representative account to the overall account performance during the period presented by emailing us or calling 303.312.5000.

The Manager Commentaries contain certain forward-looking statements about the factors that may affect future performance. These statements are based on portfolio management’s predictions and expectations concerning certain future events and their expected impact on the strategy, such as performance of the economy as a whole and of specific industry sectors, changes in the levels of interest rates, the impact of developing world events, and other factors that may influence the future performance of the strategy. Portfolio management believes these forward-looking statements to be reasonable, although they are inherently uncertain and difficult to predict. Actual events may cause adjustments in portfolio management strategies from those currently expected to be employed.

See performance disclosure for a presentation that complies with the requirements of the GIPS standards. Please contact us to request a complete list and description of all firm composites.

All indices are unmanaged and investors cannot invest directly in an index. View index descriptions.

Opportunities for Income and Total Return

The investment team shares its thoughts on the benefits of Global Dividend Investing.

Download

Preserving Capital While Growing Income Over Time

Read Portfolio Manager Alex Ruehle's interview with The Wall Street Transcript on the benefits of Global Dividend Investing.

Read Article

Request More Information

captcha