Post on 12-Apr-2020
I n ve s t m e n t O u t l o o k 2 0 1 7S a m S t o v a l l , A u g u s t 1 0 , 2 0 1 7
2Source: CFRA. 8/10/2017.
Stock Market Headwinds & Tailwinds
Headwinds
• Aging bull market & elevated equity valuations
• Aging economic cycle & rising interest rates
• Congressional roadblocks
Tailwinds
• “V-shaped” recovery in EPS + tax-cut possibility
• Stock yields versus bond yields
• Low inflation supports high P/Es
• International reawakening
3Source: CFRA, S&P DJ Indices. Past performance is no guarantee of future results. Data: 4/30/1949-8/10/2017.
Two out of three bear markets since WWII have been accompanied by recession
Recessions & Bear Markets
<- Recession
Bear ->Market
4Source: CFRA, S&P DJ Indices, NBER, Census Bureau, Federal Reserve, Conference Board.
Past performance is no guarantee of future results. Data: 7/31/1957-8/10/2017.
Low Readings Up to Three Months Prior to the Recession's Start
Recession Indicators
6 Month %
Change in Yield Curve
Recession Housing Consumer Leading (10 Year Note-
Dates Starts Sentiment Indicators One-Year Bill)
4/60-2/61 (32) -- 0.6 (0.31)
12/69-11/70 (25) -- (2.3) (0.75)
11/73-3/75 (33) -- (3.0) (1.42)
1/80-7/80 (27) (22) (4.5) (2.14)
7/81-11/82 (18) 19 (2.4) (2.10)
7/90-3/91 (18) (4) (1.0) 0.38
3/01-11/01 (10) (19) (6.2) (0.36)
12/07-9/09 (37) (18) (3.8) 0.38
Average (25) (9) (2.8) (0.79)
Today 2.1 1.7 2.5 1.10
Year-Over-Year % Change in
5Source: CFRA, S&P Capital IQ. Past performance is no guarantee of future results. Data: 12/31/2013-8/10/2017.
Progression of EPS Estimates
Full-year 2017 EPS Estimates are not collapsing as they did in 2015 and 2016
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
FY 2015 FY 2016 FY2017
Prior Current Year
6Source: CFRA, S&P Global Market Intelligence. A=Actual, E=Estimated. Past performance is no guarantee of future results. Data: 6/30/2014-8/10/2017.
S&P 500 EPS Should Post a “V-Shaped” Recovery
Y/Y % Changes in Actual and Estimated S&P 500 Operating EPS
9.9% 9.2%7.4%
3.2%
0.2%
-1.3%
-4.1%
-6.7%
-1.7%
4.0%
6.1%
15.5%
10.7%
6.6%
11.7%
-10%
-5%
0%
5%
10%
15%
20%
7Source: CFRA, S&P DJ Indices. Data: 5/31/1953-7/31/2017.
18%
11%
5%
3%
1%
13%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
Div. Yld. >10YYld.
10Y> Div. Yld.by 0% to 1%
10Y> Div. Yld.by 1% to 2%
10Y> Div. Yld.by 2% to 3%
10Y> Div. Yld.by 3% to 4%
10Y> Div. Yld.by More Than
4%
Average S&P 500 Price Change 12 Months After Dividend Yield vs. 10-Year Yield Differentials
Stocks Still Look Attractive vs. Bonds
8Source: CFRA, S&P DJ Indices, Action Economics, BLS. Past performance is no guarantee of future results. Data: 12/30/1994-8/10/2017.
The “Rule of 20”: Near-Term Overvaluation
The “Rule of 20” (20-CPI*EPS) Says that Fair Value for the S&P 500Depends on Both EPS and CPI
Act./Est.
As of… Core CPI EPS Ests. Target % Chg.
Q2 '17E 1.7 124.94 2286 (7%)
Q3 '17E 1.6 126.97 2336 (5%)
Q4 '17E 1.7 130.62 2390 (2%)
Q1 '18E 1.6 133.47 2456 0%
Q2 '18E 2.0 136.60 2459 0%
Q3 '18E 2.2 140.59 2503 2%
Q4 '18E 2.2 144.45 2571 5%
S&P 500
9Source: CFRA, Action Economics. Data: 8/10/2017.
The Direction of the Dollar
Actual and projected values of the Federal Reserve’s U.S. dollar index
89.6 90.3
93.7 94.3
93.0
88.9 88.6
88.0
89.0
84.0
85.0
86.0
87.0
88.0
89.0
90.0
91.0
92.0
93.0
94.0
95.0
Q2 '16 Q3 '16 Q4 '16 Q1 '17 Q2 '17 Q3 '17E Q4 '17E Q1 '18E Q2 '18E
10
Disclosures
This content is published and originally distributed by Accounting Research & Analytics, LLC d/b/a CFRA (“CFRA US”), with the following exceptions: In the UK/EU/EEA, it is published and originally distributed by CFRA UK Limited (company number 08456139 registered in England & Wales with its registered office address at 131 Edgware Road, London, W2 2AP, United Kingdom), an Appointed Representative of Hutchinson Lilley Investments LLP, which is regulated by the Financial Conduct Authority (No. 582181), and in Malaysia by Standard & Poor’s Malaysia Sdn. Bhd, which is regulated by Securities Commission Malaysia, (No. CMSL/A0181/2007. These parties and their subsidiaries maintain no responsibility for reports redistributed by third parties such as brokers or financial advisors.
The content of this presentation and the opinions expressed herein are those of CFRA based upon publicly-available information that CFRA believes to be reliable and the opinions are subject to change without notice. This analysis has not been submitted to, nor received approval from, the United States Securities and Exchange Commission or any other regulatory body. While CFRA exercised due care in compiling this analysis, CFRA AND ALL RELATED ENTITIES SPECIFICALLY DISCLAIM ALL WARRANTIES, EXPRESS OR IMPLIED, to the full extent permitted by law, regarding the accuracy, completeness, or usefulness of this information and assumes no liability with respect to the consequences of relying on this information for investment or other purposes. No content (including ratings, credit-related analyses and data, valuations, model, software or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of CFRA. The Content shall not be used for any unlawful or unauthorized purposes. CFRA and any third-party providers, as well as their directors, officers, shareholders, employees or agents do not guarantee the accuracy, completeness, timeliness or availability of the Content.
Past performance is not necessarily indicative of future results.
This document may contain forward-looking statements or forecasts; such forecasts are not a reliable indicator of future performance.
This report is not intended to, and does not, constitute an offer or solicitation to buy and sell securities or engage in any investment activity. This report is for informational purposes only. Recommendations in this report are not made with respect to any particular investor or type of investor. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors and this material is not intended for any specific investor and does not take into account an investor's particular investment objectives, financial situations or needs. Before acting on any recommendation in this material, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice.
Additional information on a subject company may be available upon request.
CFRA's financial data provider is S&P Global Market Intelligence. THIS DOCUMENT CONTAINS COPYRIGHTED AND TRADE SECRET MATERIAL DISTRIBUTED UNDER LICENSE FROM S&P GLOBAL MARKET INTELLIGENCE. FOR RECIPIENT'S INTERNAL USE ONLY.
The Global Industry Classification Standard (GICS®) was developed by and/or is the exclusive property of MSCI, Inc. and S&P Global Market Intelligence. GICS is a service mark of MSCI and S&P Global Market Intelligence and has been licensed for use by CFRA.
Certain information in this presentation is provided by S&P Global, Inc. and/or its affiliates and subsidiaries (collectively “S&P Global”). Such information is subject to the following disclaimers and notices: “Copyright © 2017, S&P Global Market Intelligence (and its affiliates as applicable). All rights reserved. Nothing contained herein is investment advice and a reference to a particular investment or security, a credit rating or any observation concerning a security or investment provided by S&P Global is not a recommendation to buy, sell or hold such investment or security or make any other investment decisions. This may contain information obtained from third parties, including ratings from credit ratings agencies. Reproduction and distribution of S&P Global’s information and third party content in any form is prohibited except with the prior written permission of S&P Global or the related third party, as applicable. Neither S&P Global nor its third party providers guarantee the accuracy, completeness, timeliness or availability of any information, including ratings, and are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, or for the results obtained from the use of such information or content.
11
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For financial professional use only. Not for public distribution. 12
Why Dividend Growth Now
For financial professional use only. Not for public distribution. 13
Finding the S&P 500’s Best Dividend Growers
Common Traits Of High
Quality Companies That
Grow Dividends
• History of profit and growth
• Strong fundamentals
• Stable earnings streams
• Firm commitment to
shareholders
• Management team
conviction in the business
Focusing on the S&P 500
Dividend Aristocrats
• S&P 500 Dividend
Aristocrats have the
longest track record of
growing dividends
– Large cap, blue chip
companies within the S&P
500 that have consistently
increased dividends every
year for at least 25
consecutive years
For financial professional use only. Not for public distribution. 14
S&P 500 Dividend Aristocrats: Going Beyond Quality
May 2010–June 2016
Source: Bloomberg and Morningstar, 5/312010–6/30/2016. Index returns are for illustrative purposes only and do not represent fund performance. Index performance returns do not reflect any management
fees, transaction costs or expenses. Indexes are unmanaged, and one cannot invest in an index. Past performance does not guarantee future results.
Update
For financial professional use only. Not for public distribution. 15
While Earnings Faltered, The Dividend Aristocrats Moved Ahead
Year-Over-Year H1 2016 Earnings
Source: Average of Q1 and Q2 2016 earnings results. FactSet, September 8, 2016.
Update
For financial professional use only. Not for public distribution. 16
Higher, More Consistent Long Term Dividend Growth
Dividend Growth Rate
2006—2015
10-Year Compounded Growth Rate
2006—2015
Source: Standard & Poor's, 12/2015. Regular Dividends only.
Update
For financial professional use only. Not for public distribution. 17
Source: Morningstar. S&P 500 Dividend Aristocrats: 5/2/2005-6/30/2017. Index returns are for illustrative purposes only and do not represent fund performance. Performance returns does not reflect any
management fees, transaction costs or expenses. Indexes are unmanaged, and one cannot invest in an index. Past performance does not guarantee future results. For fund performance current to the
most recent month end, visit ProShares.com.
S&P 500 Dividend Aristocrats Historically Delivered Strong Up/Down Capture Ratios
S&P 500 Dividend Aristocrats Index
May 2005 – June 2017
For financial professional use only. Not for public distribution. 18
Source: Morningstar and Bloomberg 4/1/2008 to 6/30/2017. Index returns are for illustrative purposes only and do not represent fund performance. Index returns do not reflect any management fees,
transaction costs or expenses. Indexes are unmanaged and one cannot invest in an index. Past performance is no guarantee of future results.
Consistent Outperformance Profile Over Time
Ro
llin
g 3
-Yea
r R
etu
rns
S&P 500 Dividend Aristocrats Relative to:
# of Periods
Outperformed
% of Periods
Outperformed
S&P 500 103 of 108 95%
Excess R
eturn
S&P 500
S&P Dividend Aristocrats
Excess Return
Rolling 3-Year Returns for S&P 500 Dividend Aristocrats vs. S&P 500
April 2008 – June 2017
For financial professional use only. Not for public distribution. 19
Dividend Growth Approach Produced Significant Outperformance in Small- and Mid-Caps
Small-Cap Returns11/11/2014‒6/30/2016
Mid-Cap Returns1/5/2015‒6/30/2016
Source: Bloomberg and Morningstar, Small-cap returns from 11/11/2014-6/30/2016. Mid-cap returns from 1/5/2015-6/30/2016. Index returns are for illustrative purposes only and do not represent fund
performance. Index performance returns do not reflect any management fees, transaction costs or expenses. Indexes are unmanaged, and one cannot invest in an index. Past performance does not
guarantee future results.
Volatility
(Standard Deviation)
Russell 2000 Dividend
Growers14.82%
Russell 2000 18.24%
Volatility
(Standard Deviation)
S&P MidCap 400
Dividend Aristocrats14.70%
S&P MidCap 400 16.23%
Update
For financial professional use only. Not for public distribution. 20
Performance as of June 30, 2016
Fund Inception 10/9/13 1-Year 5-Year Since Inception
ProShares S&P 500 Aristocrats ETF (NOBL)—NAV 12.69% – 13.97%
ProShares S&P 500 Aristocrats ETF (NOBL)—Market Price 12.80% – 13.99%
Source: Bloomberg, 06/30/2016. Expense cap effective with Contractual Waiver ending 9/30/16. The performance quoted represents past
performance and does not guarantee future results. Investment return and principal value of an investment will fluctuate so that an investor’s
shares, when sold or redeemed, may be worth more or less than the original cost. Current performance may be lower or higher than the
performance quoted. Performance data current to the most recent month end may be obtained by calling 866.776.5125 or by visiting
ProShares.com. Shares are bought and sold at market price (not NAV) and are not individually redeemed from the fund. Brokerage commissions will
reduce returns.
Fund Inception 2/3/15 1-Year 5-Year Since Inception
ProShares S&P MidCap 400 Dividend Aristocrats ETF (REGL)—NAV 18.03% – 12.58%
ProShares S&P MidCap 400 Dividend Aristocrats ETF (REGL)—Market Price 17.96% – 12.69%
Fund Inception 2/3/15 1-Year 5-Year Since Inception
ProShares Russell 2000 Dividend Growers ETF (SMDV) — NAV 12.47% – 8.80%
ProShares Russell 2000 Dividend Growers ETF (SMDV) — Market Price 12.54% – 8.93%
Update
For financial professional use only. Not for public distribution. 21
*If fewer than 40 stocks, or 25 stocks for MSCI Europe Dividend Masters, meet criteria, indexes may include companies with shorter dividend growth histories.
Popular Indexes Focused on Their Best Dividend Growers
S&P
MidCap 400
• Minimum of 40 stocks, 25 for MSCI Europe Dividend Masters
• Equal weighting
• 30% cap on each sector
• 50% country cap for international indexes
Methodology
S&P
MidCap 400
Dividend
Aristocrats
Russell
2000
Dividend
Growth
MSCI EAFE
Dividend
Masters
S&P 500
Dividend
Aristocrats
MSCI
Europe
Dividend
Masters
Russell
2000MSCI EAFES&P 500
Underlying
IndexMSCI
Europe
Minimum 25
years
Minimum 15
years
Minimum 10
years
Minimum 10
years
Consecutive
Years of
Dividend
Growth*
Minimum 10
years
MSCI
Emerging
Markets
Dividend
Masters
MSCI
Emerging
Markets
Minimum 7
years
For financial professional use only. Not for public distribution. 22
How to Use ProShares Dividend Growers in a Portfolio
Dividend Growth Investments
Fit a Range of Equity AllocationsProShares Dividend
Growers ETFs can be used:
• To replace underperforming
or index-hugging active core
funds
• As alternatives to market
cap-weighted index funds
• As alternatives to high-
dividend-paying strategies,
which many believe will
perform poorly in a rising
rates environment
Hypothetical Portfolio Allocation
For Illustrative Purposes Only
Need to
update graphic
to include all
slots
For financial professional use only. Not for public distribution. 23
ProShares Dividend Growers ETFs: Focused on the Best Dividend Growers
S&P 500 Dividend Aristocrats ETF
S&P 500® Dividend Aristocrats® Index
S&P MidCap 400 Dividend Aristocrats ETF
S&P MidCap 400® Dividend Aristocrats® Index
Russell 2000 Dividend Growers ETF
Russell 2000® Dividend Growth Index
MSCI EAFE Dividend Growers ETF
MSCI EAFE Dividend Masters Index
MSCI Europe Dividend Growers ETF
MSCI Europe Dividend Masters Index
MSCI Emerging Markets Dividend Growers ETF
MSCI Emerging Markets Dividend Masters Index
Expense Ratio
0.35%
0.40%
0.40%
0.50%
0.55%
0.60%
For financial professional use only. Not for public distribution. 24
Investing involves risk, including the possible loss of principal. These ProShares ETFs are
diversified and entail certain risks, including imperfect benchmark correlation and market price
variance, that may decrease performance. Investments in smaller companies typically exhibit higher
volatility. Smaller company stocks also may trade at greater spreads or lower trading volumes, and
may be less liquid than stocks of larger companies. International investments may involve risks from:
geographic concentration, differences in valuation and valuation times, unfavorable fluctuations in
currency, differences in generally accepted accounting principles, and from economic or political
instability. Please see summary and full prospectuses for a more complete description of risks. There
is no guarantee any ProShares ETF will achieve its investment objective.
Carefully consider the investment objectives, risks, charges and expenses of ProShares before
investing. This and other information can be found in their summary and full prospectuses.
Read them carefully before investing. Obtain them from your financial advisor or broker/dealer
representative or visit ProShares.com.
ProShares are distributed by SEI Investments Distribution Co., which is not affiliated with the funds’
advisor.
A Reminder About Risk and Prospectus
For financial professional use only. Not for public distribution. 25
The “S&P 500® Dividend Aristocrats® Index” and "S&P MidCap 400® Dividend Aristocrats Index" are products of S&P Dow Jones Indices LLC and its
affiliates. "Russell 2000® Dividend Growth Index" and "Russell® " are trademarks of Russell Investment Group. “MSCI,” “MSCI Inc.,” “MSCI Index” and
“EAFE” are service marks of MSCI. All have been licensed for use by ProShares. “S&P®” is a registered trademark of Standard & Poor’s Financial
Services LLC (“S&P”) and “Dow Jones®” is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”) and have been licensed for use
by S&P Dow Jones Indices LLC and its affiliates. ProShares have not been passed on by these entities and their affiliates as to their legality or suitability.
ProShares based on these indexes are not sponsored, endorsed, sold or promoted by these entities and their affiliates, and they make no representation
regarding the advisability of investing in ProShares. THESE ENTITIES AND THEIR AFFILIATES MAKE NO WARRANTIES AND BEAR NO LIABILITY
WITH RESPECT TO PROSHARES.
You agree not to reproduce, distribute or disseminate fund holdings information, defined and limited to constituents, weights, valuation ratios, and volatility
characteristics, or any Index holdings information in whole or in part, in any form, without prior written permission from MSCI. All such information is
provided on an “as is” basis, and MSCI makes no express or implied warranties or representations of any kind with respect to any of the information
contained herein (including, without limitation, with respect to the accuracy, completeness, reliability, merchantability or fitness for a particular purpose of
any such information or any financial results you may achieve from its use). In no event shall MSCI or its affiliates have any liability relating to the use of
any such information. You may use this information solely for informational purposes in order to review the holdings of your investment. You may not
make any other use of this information, including, without limitation, in connection with or as the basis for any other financial product or index.
Important Disclosures
For financial professional use only. Not for public distribution. 26
• ProShares.com
• 866.PRO.5125
• info@ProShares.com
ProShares Dividend Growers ETFs
For financial professional use only. Not for public distribution. 27
Thank You!