The Dispatch

Manager Spotlight

Ativo Capital

Putting Philosophy into Action

Ativo puts its philosophy into action with a four-step process that is driven by its proprietary model and focused on bottom-up stock selection. Each of the following guiding principles is reflected in the investment process, providing a clear link between the workings of the market and how Ativo invests:

1. Markets are rational over time, but in the short term the behavioral biases of investors lead to stock mispricing. Ativo relies on active management to identify and exploit pricing inefficiencies.
2. The academic work that is the basis of Ativo’s approach represents sound financial theory. It rigorously applies discounted cash flow return on investment methodologies.
3. Companies that create real shareholder value are those that generate real earnings in excess of real capital cost.
4. A broad opportunity set increases the likelihood of adding alpha. Ativo portfolios include both growth and value stocks, as well as benchmark and non-benchmark holdings. The tilt depends on where the most attractive opportunities are at a given time.
5. Controlling risk is vital to generating consistent long-term returns. Ativo follows a systematic, model-based process designed to minimize unintended exposures and eliminate emotion.

The model produces a computerized scorecard for each stock in its universe based on a strict set of rules embodied by various factors. By following these rules, Ativo avoids the behavioral biases that are inherent in traditional, fundamental approaches.

The model is proprietary, and its component factors are also unique to Ativo. Consequently, its factors are not subject to the decay that occurs with “off-the-shelf” factors, which lose their predictive ability as more investors use them.

The EQIS platform offers the Ativo Small Cap and Ativo International ADR strategies. Ativo’s composite returns adhere to Global Investment Performance Standards (GIPS).

If you would like to deploy these strategies, go to the respective client contact and from the Action drop-down menu in the upper right corner, select Change Asset Allocation.

This option is only available for clients who have provided you with trading authorization. If you do not have trading authorization, you can either submit a Limited Power of Attorney signed by the client or use the Client Directed Asset Allocation Form found on the Resources Tab and have the client sign it.

Your EQIS Business Consultant is available to help you implement these changes, or contact Advisor Services at support@EQIS.com or 800-949-9936 and press 2.

The information herein is believed to be reliable but is not guaranteed by EQIS. EQIS and Ativo Capital are not affiliated. This is not an offer to buy or sell securities.

In This Issue:

• State of the Markets   |   Inflation Exceeds Expectations
• Making it Easier to Do Business   |   New “Know Your Client” Questions
• Manager Spotlight   |   Ativo Capital
• Your EQIS Team   |   Meet Sam Smith
• Best Practices   |   What’s in a Name?

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