SINCE 1995
Zacks
All Cap Core Strategy
For Financial Professional Use Only / Not for Public Distribution
WHY ALL CAP AND WHY ZACKS
Excess returns start with market anomalies.
That’s what 40 years of research and investing has shown us. But capturing this opportunity requires three things: the data to properly identify anomalies, a disciplined and unwavering investment process, and enough time to see the strategy through.
With Zacks Investment Research, the Multi-Factor Alpha Model, and a quarter century of stellar performance, the Zacks All Cap Core Strategy has all three.
For Financial Professional Use Only / Not for Public Distribution
With a diverse mix of investments and a balance of value and growth stocks, the All Cap Core Strategy is designed to capture alpha while realizing the benefits of diversification.
Designed for risk-adjusted growth.
Our methodology for this strategy is complex and thorough, yet the underlying principle is simple: we buy stocks with improving fundamentals and sell those with deteriorating ones. With unlimited access to the data sets and analytical tools of one of the country’s largest research firms, Zacks Investment Research, we have been able to use this simple principle to achieve award-winning performance through multiple market cycles.
Risk-adjusted return potential
Top Benefits of the All Cap Core Strategy:
Well-diversified
Balance of value and growth
Strict risk controls
The All Cap Core Strategy is, like all Zacks Strategies, designed to capitalize on investment anomalies that have been tested through decades of academic theory, independent research and everyday practice.
For Financial Professional Use Only / Not for Public Distribution
OUR METHODOLOGY
The Multi-Factor Alpha Model
We designed the Multi-Factor Alpha Model to incorporate both the insight from our parent company’s earnings estimate revisions research, and the fundamental inputs most relevant to the objectives of the All Cap Core Strategy. Its function is to assess each stock against its peers in three distinct categories.
The first category is a proprietary earnings estimate revisions model called the Zacks Rank, which processes data from nearly 4,500 firms, uses real-time earnings consensus, and assigns a numerical score based on a four-part analysis: agreement, magnitude, upside and surprise. We’ve combined this rank with two additional factors, sales estimate revisions and free cash flow, which are vital to identifying stocks with high potential for risk-adjusted returns.
For Financial Professional Use Only / Not for Public Distribution
Does the company score highly according to the Zacks Rank?
Does the company have relatively strong cash flows, suggesting a sustainable dividend?
What were the analyst revisions on sales estimates prior to the company’s earnings?
For Financial Professional Use Only / Not for Public Distribution
OUR PROCESS
The Zacks All Cap Core Strategy Process
Universe Selection
Russell 3000 Index
Our process begins with the 1,800 most liquid U.S. stocks in the Russell 3000 Index.
For Financial Professional Use Only / Not for Public Distribution
Multi Factor Screen
Multi-Factor Alpha Model
We ascribe three primary scores, one for each factor in our proprietary alpha model, to each of these 1,800 companies within. The scores are relative to their peers and are updated every day.
OUR PROCESS
The Zacks All Cap Core Strategy Process
For Financial Professional Use Only / Not for Public Distribution
Stock Selection
Optimizer
We engage in bottom-up fundamental analysis using a proprietary portfolio risk optimizer.
OUR PROCESS
The Zacks All Cap Core Strategy Process
For Financial Professional Use Only / Not for Public Distribution
Portfolio Construction
Portfolio Manager Review
Our portfolio managers design the portfolio with primary risk controls in place, including sector weights, target turnover and number of positions.
OUR PROCESS
The Zacks All Cap Core Strategy Process
For Financial Professional Use Only / Not for Public Distribution
Daily Portfolio Review
Implementation
Our disciplined implementation process is designed to keep the portfolio diversified, mitigating risk relative to the benchmark while focusing on expected alpha drivers.
OUR PROCESS
The Zacks All Cap Core Strategy Process
For Financial Professional Use Only / Not for Public Distribution
We believe strict implementation rules are required to produce consistent results. That’s why we frequently adjust the portfolio to introduce stocks that score highly and remove those that fail to meet our stringent risk control and alpha parameters.
OUR PROCESS
The Zacks All Cap Core Strategy Process
For Financial Professional Use Only / Not for Public Distribution
ZACKS ALL CAP CORE STRATEGY:
Key Features
The All Cap Core Strategy is one of Zacks Investment Management’s longest-running and most successful investment strategies. Containing both value and growth stocks, it’s a well-diversified all-in-one portfolio that suits the needs of a wide variety of investors.
For Financial Professional Use Only / Not for Public Distribution
The objective of the Zacks All Cap Core Strategy is to provide risk-adjusted returns and diversification benefits relative to the Russell 3000 Index.
OBJECTIVE
Blended: Consists of both growth and value stocks
Characteristics
All-Cap: Contains small-, mid-, and large-cap equities
Fundamental: Managed with strong qualitative oversight
Disciplined: Strict risk controls and exclusion of concept stocks
“The All Cap Core Strategy’s history reinforces what we’ve learned through research: multi-factor strategies, run in a systematic and disciplined manner, can generate meaningful alpha over a full market cycle.”
Mitch Zacks
Principal and Senior Portfolio Manager
For Financial Professional Use Only / Not for Public Distribution
The Zacks All Cap Core Strategy is part of the Russell 3000. From 1995 to 2020, it has consistently placed in the top 10% of managers in this group.
Performance Ranking
Please see disclosure at the end of this document.
The Zacks All Cap Core Strategy ranks in the top 8% out of __ managers in the Morningstar All Domestic Equity Managers.
For Financial Professional Use Only / Not for Public Distribution
Advantages
Expert Management
The All Cap Core Strategy is managed by an experienced, accomplished team of portfolio managers with expansive knowledge of quantitative investing in U.S. markets.
Systematic Implementation
Recognized Performance
Reliable Process
This is one of several Zacks strategies that have consistently outperformed their benchmarks over the past quarter century, through multiple market cycles and volatile climates.
For Financial Professional Use Only / Not for Public Distribution
Our proprietary, bottom-up fundamental analysis and Multi-Factor Alpha Model have led to the stellar performance and steadiness of Zacks’ leading strategies. They also enable us to seek the best possible risk-adjusted returns for the All Cap Core Strategy.
The portfolio management team follows a consistent, systematic implementation process for this strategy. This helps to mitigate unintended exposures, control risk and limit transaction costs.
Research-Driven
Because we are vertically integrated with Zacks Investment Research, we are the only firm uniquely positioned with unlimited access to the data they produce. This enables us to manage the All Cap Core Strategy with the insight of one of Wall Street’s largest research providers.
OUR TEAM:
The Team Behind the All Cap Core Strategy
The professionals below represent the expertise, experience and scholarly research that have come to define Zacks Investment Management. The All Cap Core Strategy relies on these portfolio management, research and analysis teams, as well as the proprietary models and processes that they have developed.
For Financial Professional Use Only / Not for Public Distribution
For Financial Professional Use Only / Not for Public Distribution
Mitch Zacks is President of Zacks Investment Management, Senior Portfolio Manager,
a member of the Investment Policy Committee, and the firm’s primary expert on quantitative investing.
Mitch Zacks, MBA
BA, Economics, Yale University
MBA, Analytic Finance, University of Chicago
Principal and Senior Portfolio Manager
With over 22 years of investment experience, Mitch is principally involved in the engineering of the strategies that define Zacks, and he has personally developed many of the proprietary models implemented within those strategies.
Prior to joining Zacks, Mitch was an investment banking analyst with Lazard Frères. He has become widely recognized as an expert on corporate earnings, having written two books on quantitative investment strategies: “Ahead of the Market”, which details the Zacks method for spotting winning stocks early in any cycle, and “The Little Book of Stock Market Profits: The Best Strategies of All Time Made Better,” which was one of the top selling investment books in its publishing year. He has written a weekly column for the Chicago-Sun Times and currently produces a popular report, Mitch on the Markets.
Atanu Ghosh is a quantitative and fundamental research analyst and an assistant equity portfolio manager. Prior to joining Zacks, he was a Senior Research Analyst at Fiduciary Asset Management on their large cap core and quantitative strategy teams. Atanu develops quantitative models that are used in the management of Zacks investment strategies. He is constantly following industry trends and research to help the portfolio management team stay on the cutting edge, and he is consistently refining and improving investment models to adapt to changing market environments.
Atanu Ghosh, CFA
BA, Computer Science, Jadavpur University
Assistant Portfolio Manager
MBA, Washington University
For Financial Professional Use Only / Not for Public Distribution
Prasanth Sankar is Assistant Portfolio Manager for the Zacks Dividend, Mid Cap Core, and Small Cap Core Strategies. He brings a mathematics background to the portfolio management team and uses his expertise to develop and refine many of the firm’s proprietary models.
Prasanth Sankar, Ph.D.
BA, Physics, Indian Institute of Technology
PhD, Theoretical Physics, University of Illinois
Assistant Portfolio Manager
With 13 years of investment industry experience, Prasanth uses sophisticated and in-depth quantitative analytics to identify anomalies and to develop investment models that profit from them.
For Financial Professional Use Only / Not for Public Distribution
Metin is a Data Scientist at Zacks Investment Management, a CFA® Charterholder, and a member of the CFA Society of Chicago. He earned his Ph.D. in Economics with honors from the University of Technology in Darmstadt, Germany and currently teaches classes in Economics and Finance at Northwestern University. His research has been published and awarded in top peer-reviewed journals, and he regularly provides commentary to the press on the latest Economic developments and speaks at Financial and Economic conferences. At Zacks, he develops quantitative models that support the management of Zacks investment strategies. Prior to joining Zacks, Metin worked at the European Central Bank, the Center for European Economic Research, and the Options and Futures Exchange in Frankfurt, Germany.
Metin Akyol, Ph.D., CFA
MSC, Economics, Goethe University Frankfurt, Germany
PhD, Economics with Honors, University of Technology in Darmstadt, Germany
CFA, The CFA Institute
Data Scientist
For Financial Professional Use Only / Not for Public Distribution
FIRM OVERVIEW AND HISTORY
Zacks History and Legacy
To trace the history of Zacks is to draw a through-line from one of one of today’s largest independent equity research providers, through 40 years of pioneering studies, to Wall Street’s original think tank.
The Origins of Zacks Investment Research
In 1978, after receiving his doctorate from MIT, Len Zacks was the first to document the value of earnings estimate revisions within the stock selection process.
As time went on, his seminal article proved to be both accurate and influential. Zacks estimate revisions studies have become the most powerful indicator in forecasting material changes in earnings, and earnings have continued to be the most important fundamental factor affecting stock prices. Zacks Investment Management became synonymous with earnings estimate revisions analysis, and began originating concepts and innovations such as:
EPS surprise, now widely used in the investment industry
The Zacks Performance Rank, a proprietary stock-ranking model and the core of the Zacks Investment Philosophy
Numerous proprietary quantitative models
Zacks Investment Research is now one of the largest providers of independent research in the U.S., with a litany of Ph.D.s and other analysts involved in developing and refining models, assessing data and conducting research in order to form new insights into the investment process.
For Financial Professional Use Only / Not for Public Distribution
In 1992, Zacks Investment Management was established as a wholly-owned subsidiary of Zacks Investment Research. As a boutique wealth management firm, we apply the time-tested insights of our parent company to create models like the Zacks Dividend Strategy.
ZACKS INVESTMENT MANAGEMENT:
Born on Research
Since our inception, Zacks Investment Management has been dedicated to delivering results for our clients by seeking excess returns over standard benchmarks within a risk-controlled framework.
Ultimately, our active management approach and bottom-up fundamental stock selection process were built upon the very discoveries that changed the industry over 40 years ago, and have generated exceptional results ever since. Within the Zacks Dividend Strategy, we will continue to adhere to this discipline in all market cycles.
“The Zacks legacy was born on research and it has been proven through history. We’re an independent family business and to this day we’re proud to share the fruits of our expert insights for the benefit of our clients.”
Mitch Zacks
Principal and Senior Portfolio Manager
For Financial Professional Use Only / Not for Public Distribution
227 W. Monroe, Suite 4350, Chicago, IL 60606
Toll free. (888) 775-8351 | wholesale@zacks.com
Zacks Investment Management
Learn more at www.zacksim.com
For Financial Professional Use Only / Not for Public Distribution
Learn more at www.zacksim.com
Past performance is no guarantee of future results. All Investments carry a certain amount of risk.
This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment or strategy is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole.
There is no assurance that a separately managed account will achieve its investment objective. Separately managed accounts are subject to market risk, which is the possibility that the market values of securities owned will decline and that the value of the securities may therefore be less than what you paid for them. Accordingly, you can lose money investing in a separately managed account.
The Russell 3000 Index is a well-known, unmanaged index of the prices of 3000 common stocks selected by Russell. The Russell 3000 Index assumes reinvestment of dividends but does not reflect advisory fees. An investor cannot invest directly in an index. The volatility of the benchmark may be materially different from the individual performance obtained by a specific investor. An investor cannot invest directly in an index.
The S&P 500 Index is a well-known, unmanaged index of the prices of 500 large-company common stocks, mainly blue-chip stocks, selected by Standard & Poor’s. The S&P 500 Index assumes reinvestment of dividends but does not reflect advisory fees. The volatility of the benchmark may be materially different from the individual performance obtained by a specific investor. An investor cannot invest directly in an index.
The Morningstar Universes used for comparative analysis are constructed by Morningstar (median performance) and data is provided to Zacks by Zephyr Style Advisor. The percentile ranking for each Zacks Strategy is based on the gross comparison for Zacks Strategies vs. the indicated universe rounded up to the nearest whole percentile. Other managers included in universe by Morningstar may exhibit style drift when compared to Zacks Investment Management portfolio. Neither Zacks Investment Management nor Zacks Investment Research has any affiliation with Morningstar. Neither Zacks Investment Management nor Zacks Investment Research had any influence of the process Morningstar used to determine this ranking. Rankings are as of 3/31/2021.
Other managers included in universe by Morningstar may exhibit style drift when compared to Zacks Investment Management portfolio. Neither Zacks Investment Management nor Zacks Investment Research has any affiliation with Morningstar. Neither Zacks Investment Management nor Zacks Investment Research had any influence of the process Morningstar used to determine this ranking.
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ZIM All Cap Core Strategy
By AdvisorBranding
