Disciplined Alpha Dividend Income Strategy - Altrius · 2019-04-12 · Disciplined Alpha Dividend...

ALTRIUS CAPITAL MANAGEMENT, INC. | TOLL FREE 855-ALTRIUS | WWW.ALTRIUSCAPITAL.COM

Disciplined Alpha Dividend Income Strategy1st Quarter 2019

Q1 20192

Altrius Capital Management, Inc. was founded in 1997

Altrius is 100% employee owned

Altrius is an SEC registered investment advisor

The Firm currently manages approximately $300mm in assets and offers both separately managed account and mutual fund solutions

Having managed client assets for over twodecades, Altrius claims compliance with Global Investment Performance Standards (GIPS®)

Altrius maintains a +16 year track record in the following strategies: Global Income, Disciplined Alpha Dividend Income and Unconstrained Fixed Income

Altrius HighlightsFIRM OVERVIEW

Data as of 03.31.201

AUM by Product

Disciplined AlphaDividend Income

International ADRDividend Income

Unconstrained FixedIncome

Cash

Chart1

Disciplined Alpha Dividend Income

International ADR Dividend Income

Unconstrained Fixed Income

Unconstrained Fixed Income

Cash

AUM by Product

AUM by Product

28.8

24

0

45.2

2

Sheet1

AUM by Product

Disciplined Alpha Dividend Income28.8

International ADR Dividend Income24

Unconstrained Fixed Income0

Unconstrained Fixed Income45.2

Cash2

To resize chart data range, drag lower right corner of range.

100

Q1 2019

GIPS VerificationACA Verification Services

ComplianceDzuira Compliance Services

TradingMoxy / Advent

AccountingBaccheta & Company

3

Altrius Organization

PORTFOLIO MANAGEMENT

FINANCIAL ADVISORS

OPERATIONS

Zachary Q. Smith, CFAPortfolio Manager

James M. RussoChief Investment Strategist

Rebecca A. HarmonTrader

Christopher C. Rolf, CFAExecutive Vice President

Andrea L. AitkenExecutive Vice President

Joy G. WoodsChief Operations Officer

Rita A. Hendrick-SmithDirector of Client Service

Lauren TaylorOperations Analyst

FIRM OVERVIEW

Q1 20194

Top down economics drive market cycles, market segments, and ultimately individual security prices.

Total return matters, which includes sources of returns often overlooked by investment managers and investors, such as dividends.

Value is critical; the market will reward the intrinsic value inherent in a security over time.

GLOBAL MACRODRIVES OUR

INVESTMENT ANALYSIS

TOTAL RETURN DRIVES OUR

PORTFOLIO CONSTRUCTION

VALUE DEFINES OUR

SECURITY SELECTION

Different by DesignPHILOSOPHY

Q1 20195

Income is our focus; we employ a flexible investment strategy seeking high,current income and long term capital growth by investing in stocks, bonds andalternative investments such as commodities, MLPs, REITs and preferred issues.

Global macro conditions are the basis for investing; top down economicsdrive market cycles, market segments, and ultimately individual security prices.The strategy retains asset class and sector flexibility to unearth uniqueopportunities.

Value is critical; we will not pay more for a security than we believe it is worth,with full confidence that the market will reward the intrinsic value inherent inthe security over time.

Patience is vital; we do not make extreme short term changes in response tofleeting market events, we invest for the long term and believe returns are drivenby consistency of process.

Risk management is required to ensure long term preservation of capital.

Investment PhilosophyPHILOSOPHY

Q1 2019

ECONOMIC SCENARIOS

Bear Base BullS&P 500 at 2834, Barclays Aggregate yield at 2.95%, MSCI Europe Index at 1635, BofA ML High Yield Cash Pay Index at 6.3%.

Equities Estimate Estimate Estimate

U.S. Equities -8.4% 4.5% 9.1%

Developed Int’l – Europe -8.4% 14.6% 22.7%

REITs -4.2% 4.3% 2.1%

Fixed Income

Investment-Grade Bonds 3.8% 2.2% 1.6%

High-Yield Bonds 2.4% 4.9% 5.1%

TIPS 2.8% 2.0% 0.3%

6

At Altrius, we believe that global asset allocation valuations matter. Predicated on this belief, we maintaina series of three economic scenarios under which the economy may fall at any one time. By analyzing thevaluations inherent in the current economic scenario, we are better positioned to identify securities at thesector, industry and individual company level that are best positioned to add significant value to ourportfolio over time.

Source: Advisor Intelligence/Altrius Capital

*Our likely scenario

Economic Scenario AnalysisPHILOSOPHY

Q1 2019

Demographic trends and geographic demand are derivatives of global economic growth and serve as drivers for enterprise.

Global Current and Potential Consumption Trends

Source: © 2013 The World Bank: World Development Indicators: United Nations, World Population Prospects; World HealthOrganization, National Health Account database supplemented by country data; and International Energy Agency. As of 2011 (based onmost recent data available, 2010–2011). Health expenditure (US$), electric power consumption (kwh), and energy use (kg of oilequivalent) percentages were calculated by establishing a baseline expenditure/consumption amount of $9,000, 15,000 kWh, and 8,000kg, respectively, and then measuring actual consumption per capita against the baseline.

United States Brazil India China

PotentialCurrent

7

Why Global MattersPHILOSOPHY

Q1 2019

Sources: Data represented is as of company’s latest 10-K filing for the period ending 12.31.2018 (*Fiscal year end as of9.30.2018 for Qualcomm, Intel, and Apple; ** fiscal year ends 06.30.2018 for Procter & Gamble). Foreign Revenue isbased on Total Revenue – Domestic Revenue. Logos are trademarks of their respective owners and are used forillustrative purposes and should not be construed as an endorsement or sponsorship of Altrius.

96%*

Are domestic companies really domestic anymore? While a company may be headquartered in the United States, investing requires understanding the drivers of a company’s bottom line.

8

A Sampling of Major US Brands with Foreign Revenues Above 50% of Total Revenues

81%* 63%* 60%

58% 57% 56%** 53%


Q1 2019

726.65%

601.43%

More Global Less GlobalSource: © 2014 Ned Davis Research, Inc.

Comparison of S&P 500 Companies’ Returns Cumulative Total Return for the 20-Year Period Ended 06.30.2014

“More Global” represents S&P 500

companies with reported pre-tax income of more than 50% from

foreign operations.

“Less Global” represents S&P 500

companies with reported pre-tax income of less than 50% from

foreign operations.

9

125 percentage points


Q1 201910

Source: Based on Schwert (1990) data for 1801–1870, a blend of Schwert and Siegel (2002)data for 1871–1925, and S&P 500 Index data since 1926.

Over long time periods dividends have made up a large proportion of total returns.

200 Year US Equity Return Decomposition

Why Dividends MatterPHILOSOPHY

Q1 201911

Source: Federated Advisors

Since Altrius’ inception in 1997, the Firm has been committed to dividend growth, viewing dividends as a critical component of total return.


PERCEPTION

Dividends4.2%

Capital Appreciation

5.6%

DividendYield4.2%

DividendGrowth

4.4%

ValuationChanges

1.2%

REALITY

Chart1

Dividends

Capital Appreciation

Column1

0.042

0.056

Sheet1

Column1

Dividends4%

Capital Appreciation5.60%


Chart1

Valuation Changes

Dividend Yield

Dividend Growth

Column1

0.012

0.042

0.044

Sheet1

Column1

Valuation Changes1.20%

Dividend Yield4.20%

Dividend Growth4.40%


Q1 201912

Lower Risk Higher Risk

Low

er R

etur

nH

ighe

r Ret

urn

Dividend Payers Risk/Reward01.31.1972 to 12.31.2016

Source: © 2017 Ned Davis Research, Inc. Non-dividend-paying Stocks represents non-dividend-paying stocks of the S&P 500Index; Dividend Payers w/ No Change represents all dividend-paying stocks of the S&P 500 Index that maintained their existingdividend rate and reflects the reinvestment of all income. The S&P 500 Geometric Equal-Weighted Total Return Index is calculatedusing monthly equal-weighted geometric averages of the total returns of all dividend-paying stocks and non-dividend-paying stocks.

Dividend Cutters or Eliminators

Non-dividend-paying Stocks

Dividend Payers w/ No Change

Dividend Growers & Initiators

-3%

0%

3%

6%

9%

12%

10% 15% 20% 25% 30%

Aver

age

Ann

ualiz

ed T

otal

Ret

urn

Annualized Standard Deviation


Q1 201913

*Source: Siegel, Jeremy, Future for Investors (2005), with updates through 20171 “What do dividends tell us about earnings quality,” Douglas Skinner, Chicago Booth School of Business

Agency Dilemma

Dividends help reduce problems arising from asymmetric information and conflicts of interest between investors and company

management.

Management(Agent)

Investor(Principal)

Signaling

Company management makes decisions about dividend policies using internal

forecasts; a stable and rising dividend can signal superior future return potential.

Dividend Stocks by Quintile vs. S&P 500Growth of $1,000*

Reliability

Earnings & cash flows can be manipulated while dividends are a more certain measure

of the return-generating capacity of a business model; academic research has

found that dividends provide information about the quality of earnings1.


Q1 201914

In low interest rate environments, investors substitute toward dividend-paying stocks, resulting in higher multiples for higher payout ratios.

Source: “What if the Market is Revaluing Dividends,” Fidelity Asset Management, March 2012

Multiples At Different Payout Ratios Multiples on Distributed Versus Undistributed Earnings


Q1 2019Source: Siegel, Jeremy, Future for Investors (2005), with updates through 2017

Growth of $1000: Cumulative Returns by P/E Ratio 1957-2017

Why Value Matters

15

PHILOSOPHY

Each stock in the S&P 500 is ranked from lowest to highest by price to earnings ratio on December 31st of every yearand placed into “quintiles” (baskets of 100 stocks). The stocks in each quintile are weighted by their marketcapitalization. The price/earnings ratio is defined as each stock’s price as of December 31st of that year divided by itsnet income per share. Past performance does not guarantee future results.

Q1 201916

Source: University of Michigan, FTSE Russell.*The Russell 3000 is a total market index, which assumes all cash distributions are reinvested. Peak is defined as highest index value beforea series of lower lows, while trough is defined as lowest index value before a series of higher highs. Shaded areas indicate US recessions.

At Altrius, we often view crisis as an opportunity and invest when others won’t, allowing us to capitalize on potential upside performance.

Why Value MattersPHILOSOPHY

Stock Returns During Periods of Uncertainty

May 1980:+32.0%

Jan. 2000:-4.5%

Mar. 2003:+38.1% Oct. 2005:

+16.5%

Jan 2004:+6.4%

Nov. 2008:+28.4%

Jan 2007:-2.2%

Oct. 1990:+33.9%

Mar. 1984:+19.6%

Aug. 2011:+20.0%

Sentiment cycle peak and subsequent 1-yr Russell 3000* return

Sentiment cycle trough and subsequent 1-yr Russell 3000 return

Jan 2015:-4.8%

Con

sum

er S

entim

ent I

ndex

40

50

60

70

80

90

100

110

120

Q1 201917

Contrary to CAPM efficient market claims, high risk is often not associated with high reward.

Empirical Returns by Volatility QuintileVa

lue

of $

1 In

vest

ed in

196

8

Source: Benchmarks as Limits to Arbitrage: Understanding the LowVolatility Anomaly; Financial Analyst Journal Volume 67, 2011

The Value of Risk-Adjusted ReturnsPHILOSOPHY

Q1 201918

A process designed to outperform driven by total return:

GLOBAL MACRO TOP DOWN PERSPECTIVE

DRIVES INITIAL UNIVERSE

Top down strategy employed to identify the most compelling geographic, industry

and/or sector set:

National GDP Growth

Demographics- Where is the Growth?

Durable Businesses Exploiting Growth

Demand Changes: What’s growing, moving, slowing?

Bottom up process seeks to identify companies selling below their

intrinsic value:

Seek high-yielding, durable businesses

Screen P/E ratio, the ‘real’ earnings of a company

Seeking companies generally selling for

Q1 201919

CLASSIC VALUE30-50%

PERSISTENT EARNERS30-50%

Well-established companies with dependable revenue growth, reliable earnings and healthy

dividend appreciation, priced below their historical valuations.

Persistent Earners: PepsiCo, Procter & Gamble

Financially sound companies selling at economical valuations relative to their earnings power which demonstrate a commitment to sound, above average

dividends over the long term.Classic Value: Pfizer, JPMorgan

Companies that sell at significant discounts to their intrinsic value due to market

inefficiencies driven by irrational sell-offs.Distressed/Contrarian: Pitney Bowes

DISTRESSED/CONTRARIAN0-15%

Further fundamental analysis is designed to determine which companies are increasing top line revenue growth, earnings and dividend payments. We target a portfolio of 30-50 companies that

fall into three value categories: Distressed/Contrarian, Classic Value and Persistent Earners.

Altrius Investment ProcessPROCESS

Chart1

Contrarian Distressed

Classic Value

Persistent Earners

Security Allocation

20

40

40

Sheet1

Security Allocation

Contrarian Distressed20

Classic Value40

Persistent Earners40


Q1 201920

What Smart Beta Means to Us

Since 1997, we have employed a “smart beta” active management process characterized by three aspects of portfolio management which we believe lead to potentially superior risk-adjusted returns.

We craft our portfolios based on three “factors” – macro outlook, value, and dividends– which we believe are crucial in generating total return. We don’t attempt to follow anindex, but rather tactically position ourselves where we see opportunity.

Portfolio Selection

Equal Weighting

Contrarian Rebalancing

Our portfolio holdings are weighted equally in order to diversify adequately andprevent a small number of securities from driving portfolio performance.

We employ a process of contrarian rebalancing on a conditional basis to bring holdingsback to equal weights. When deemed necessary, we trim positions that have grown invalue and use proceeds to purchase those which have declined without a deteriorationof fundamental growth potential.

PROCESS

Q1 201921

At Altrius we employ a structured risk management perspective throughout oursecurity selection, monitoring, and sell process. By maintaining a data driven, factsoriented investment management process we avoid the bias that can often resultin poor risk management decisions.

As an added risk management component to our investment process, we create worstcase and best case scenarios for evaluating market opportunities and risk.

We do not hesitate to sell securities that we believe are ‘at risk’ based onfundamental factors; we remain agile and focused on our portfolio holdings at alltimes, prepared to sell securities that are not performing or for which we believe wehave identified better candidates to maximize portfolio return and to minimizeportfolio risk.

Companies that cut their dividend are almost always an automatic sell.

Valuations that exceed 20x earnings become too pricey and typically result in a sell.

Risk Management & Sell DisciplinePROCESS

Q1 201922

Benchmarks Russell 3000 Value IndexDow Jones US Select Dividend Index

Number of Holdings 25-50

Average Market Cap $30 - $70B

Minimum Market Cap $2B

Max Position Size 5%

Turnover 15 - 30%

Portfolio Construction GuidelinesPORTFOLIO ANALYTICS

Q1 201923

Sector Diversification

Disciplined Alpha Dividend Income Sector Allocation

PORTFOLIO ANALYTICS

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Communication ServicesReal EstateBasic MaterialsTechnologyEnergyUtilitiesHealthcareConsumer CyclicalFinancial ServicesIndustrialsConsumer Defensive

Q1 201924

Sector Diversification

Disciplined Alpha Dividend Income Sector Allocation vs S&P 500

PORTFOLIO ANALYTICS

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

Real Estate, -3%

Energy, -2%

Financial Services, +1%

Basic Materials, +1%

Utilities, -3%

Consumer Cyclical, +5%

Communication Services, -3%

Healthcare, -7%

Industrials, -2%

Technology, -3%

Consumer Defensive, +16%

Q1 201925

A History of Above Average Dividends

Source: Morningstar

PORTFOLIO ANALYTICS

Altrius Disciplined Alpha Dividend Income vs. S&P 500 Dividend Yield

Altrius has consistently delivered a higher dividend yield than the S&P 500 since inception.

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00% Altrius DA S&P 500

Q1 201926

Benchmark Russell 3000 Value Index

Trailing P/E 13.46

Dividend Yield (TTM) 4.11%

Price/Book 2.47

Standard Deviation 10 YR: 13.08

Alpha (annualized) 10 YR: 1.71

Beta 10 YR: 0.94

Sharpe Ratio (annualized) 10 YR: 1.14

As of 03.31.2019

Portfolio Analytics

* 10 year statistics for the time period: 04.01.2009 to 03.31.2019

PORTFOLIO ANALYTICS

Q1 201927

Altrius Value PropositionPo

rtfol

io V

alue

Ann

ual Y

ield

Disciplined Alpha Dividend Income Growth of $1,000,000 and Dividend Yield*

PERFORMANCE

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

$-

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

$4,000,000

$4,500,000

Growth of $1,000,000 Portfolio Annual Yield

*Portfolio Growth of $1,000,000 assumes reinvestment of alldividends since inception. All data represented is gross of fees.** Most recent trailing twelve month (TTM) Portfolio Annual Yieldis 4.11% for the period 03/31/2018 – 03/31/2019

**

Iraq WarReal Estate Bubble Financial Crisis

European Crisis

Oil Sell-off

Q1 201928

Altrius Value Proposition

Disciplined Alpha Dividend Income Growth of $1,000,000 and Dividend Income*

Portf

olio

Val

ue

Ann

ual I

ncom

e

PERFORMANCE

*Portfolio Growth of $1,000,000 and Annual Income assumedividends reinvested since inception. All data represented is gross offees.

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

$-

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

$4,000,000

$4,500,000

Growth of $1,000,000 Portfolio Annual Income

Iraq WarReal Estate Bubble Financial Crisis

European Crisis

Oil Sell-off

Q1 201929

Altrius Tactical Positioning

*Portfolio Growth of $1,000,000 assumes reinvestment of all dividendssince inception. Time period represented is 2/12/2013 - 03/29/2019.All data represented is gross of fees.

PERFORMANCE

Altrius Global Income Growth of $1,000,000* vs. Income Strategies

DADI, +109.79%

IUSV, +90.60%IDU, +90.35%

IYR, +55.96%

BIZD, +23.15%

AMLP, -21.34%

XLP, +71.30%

$500,000

$750,000

$1,000,000

$1,250,000

$1,500,000

$1,750,000

$2,000,000

$2,250,000

$2,500,000DADI IUSV IDU XLP IYR BIZD AMLP

Strategy Ticker Value Cumulative ReturnAltrius Disciplined Alpha Income DADI 2,097,902.52$ 109.79%iShares Core S&P US Value ETF IUSV 1,906,004.21$ 90.60%iShares US Utilities ETF IDU 1,903,513.98$ 90.35%Consumer Staples Select Sector SPDR ETF XLP 1,712,970.22$ 71.30%iShares US Real Estate ETF IYR 1,559,607.81$ 55.96%VanEck Vectors BDC Income ETF BIZD 1,231,541.26$ 23.15%Alerian MLP ETF AMLP 786,595.66$ -21.34%

Q1 201930

Portfolio Analytics:

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

YTD03.31.2019

1 Year 3 Year 5 Year 10 Year 15 Year Since Inception01.01.2003

Altrius (Net) Altrius (Gross) Russell 3000 Value DJ US Select Dividend

PERIOD YTD03.31.2019 1 YEAR 3 YEAR 5 YEAR 10 YEAR 15 YEARSince

Inception

Altrius (Net) 13.10 10.69 11.27 8.21 14.19 7.16 7.99

Altrius (Gross) 13.42 11.92 12.52 9.42 15.50 8.44 9.27

Russell 3000 Value 11.93 5.30 10.50 7.56 14.50 7.60 9.01

DJ US Select Dividend 11.08 7.20 10.30 9.98 16.46 8.21 9.56

Disciplined Alpha Dividend Income

As of 03.31.2019

PERFORMANCE

Chart1

YTD 03.31.2019YTD 03.31.2019YTD 03.31.2019YTD 03.31.2019

1 Year1 Year1 Year1 Year





Since Inception 01.01.2003Since Inception 01.01.2003Since Inception 01.01.2003Since Inception 01.01.2003

Altrius (Net)

Altrius (Gross)

Russell 3000 Value

DJ US Select Dividend

0.131

0.1342

0.1193

0.1108

0.1069

0.1192

0.053

0.072

0.1127

0.1252

0.105

0.103

0.0821

0.0942

0.0756

0.0998

0.1419

0.155

0.145

0.1646

0.0716

0.0844

0.076

0.0821

0.0799

0.0927

0.0901

0.0956

Sheet1

Altrius (Net)Altrius (Gross)Russell 3000 ValueDJ US Select Dividend

YTD 03.31.201913.10%13.42%11.93%11.08%

1 Year10.69%11.92%5.30%7.20%

3 Year11.27%12.52%10.50%10.30%

5 Year8.21%9.42%7.56%9.98%

10 Year14.19%15.50%14.50%16.46%

15 Year7.16%8.44%7.60%8.21%

Since Inception 01.01.20037.99%9.27%9.01%9.56%


Q1 201931

Altrius Disciplined Alpha Dividend Income Composite PerformanceDecember 31, 2003– December 31, 2018

YearGross

Return %

Net Return

%

Benchmark Russell 1000

Value Return%

Composite 3-Yr

St Dev %

Benchmark Russell 1000

Value 3Yr

St Dev %

# of Portfolios

Composite Dispersion

%

TotalComposite

Assets

Percent ofFirm

Assets

2004 7.68 6.35 16.49 N/A N/A 27 1.00 7,704,441 19.22

2005 3.14 1.95 7.05 7.53 9.59 42 1.73 9,647,454 17.61

2006 13.15 11.86 22.25 5.65 6.77 49 3.89 9,684,427 12.39

2007 3.48 2.14 (0.17) 6.95 8.17 66 1.52 16,204,183 16.92

2008 (28.05) (29.05) (36.85) 13.03 15.58 82 1.50 19,472,085 24.02

2009 26.06 24.36 19.69 18.93 21.40 97 1.58 29,880,750 28.25

2010 14.25 12.95 15.51 20.91 23.51 103 0.35 40,704,238 34.08

2011 2.96 1.78 0.39 19.10 20.98 101 0.46 32,401,233 26.04

2012 10.97 9.69 17.51 14.80 15.73 105 0.39 39,979,598 29.62

2013 38.86 37.38 32.53 12.62 12.88 117 0.77 59,675,808 34.35

2014 11.05 9.82 13.45 10.07 9.33 128 0.46 56,308,054 29.75

2015 (3.52) (4.58) (3.83) 11.83 10.82 114 0.47 34,362,139 18.70

2016 17.06 15.72 17.34 12.34 10.91 133 0.90 46,328,213 17.35

2017 16.20 14.93 13.19 12.02 10.47 142 0.32 42,694,959 12.53

2018 (3.46) (4.53) (8.57) 11.49 11.21 148 0.50 41,141,380 12.39

Composite OverviewPERFORMANCE

Q1 201932

ACCOUNT FORMAT SEPARATELY MANAGED ACCOUNT

INSTITUTIONAL ACCOUNT MINIMUM $1,000,000

MANAGEMENT FEE < $25M 55 BP

MANAGEMENT FEE > $25M 50 BP

Management Fee StructureFEE STRUCTURE

Q1 201933

Performance ReportingAltrius Capital Management, Inc. (Altrius) claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared

and presented this report in compliance with the GIPS® standards. Altrius has been independently verified for the periods January 31, 2001 –December 31, 2017 by ACA Verification Services. The verification reports are available upon request. Verification assesses whether (1) the firm hascomplied with all the composite construction requirements of the GIPS® standards on a firm-wide basis and (2) the firm’s policies and procedures aredesigned to calculate and present performance in compliance with the GIPS® standards. Verification does not ensure the accuracy of any specificcomposite presentation.

The Firm is defined as Altrius Capital Management, Inc. (Altrius), registered investment advisors with the Securities and Exchange Commission.Altrius was founded in 1997 and manages equity, fixed-income and balanced portfolios for high net worth individuals and families.

Composite CharacteristicsThe Disciplined Alpha Dividend Strategy is a subaccount from the Altrius Global Income Composite. As of 6/30/16, the name of the

Disciplined Alpha Dividend Strategy was changed from the U.S. Large Cap Dividend Income Strategy. The composite and subaccount were created inDecember 2010 with a performance inception date of December 31, 2002. The subaccount strategy seeks long term capital appreciation and income byinvesting at least 80% of its assets in a diversified portfolio of income-producing equity securities paying higher than average dividends. 30 – 50 U.S.positions are chosen from a universe of stocks with market capitalizations generally greater than $10 billion.

Accounts are included on the last day of the month in which the account meets the composite definition. Accounts no longer under management arewithdrawn from the composite on the first day of the month in which they are no longer under management. Closed account data is included in thecomposite as mandated by the standards in order to eliminate a survivorship bias.

DisclosureDISCLOSURE

Q1 201934

BenchmarkThe benchmarks are the Russell 3000 Value Index, the DJ US Select Dividend Index and Morningstar US OE Large Value. Effective

10/1/2017, the benchmark was changed from the Russell 1000 Value Index to the Russell 3000 Value index. The volatility of the indices may be materially different from that of the performance composite. In addition, the composite’s holdings may differ significantly from the securities that comprise the indices . The indices have not been selected to represent appropriate benchmarks to compare the composite’s performance, but rather are disclosed to allow for comparison of the composite’s performance to those of well-known and widely recognized indices. Economic factors, market conditions, and investment strategies will affect the performance of any portfolio, and there are no assurances that it will match or outperform any particular benchmark.

Performance CalculationsValuations and returns are computed and stated in U.S. dollars. Results reflect the reinvestment of dividends and other earnings.Gross of fee return is net of transaction costs and gross of management and custodian fees. Net-of-fees returns are calculated using actual

management fees that were paid and are presented before custodial fees and but after management fees and all trading expenses. Returns can be net orgross of withholding taxes, depending on how taxes are recorded at the custodian. Some accounts pay fees outside of their accounts; thus, we enter a non-cash transaction in the performance system such that we can calculate a net of fees return. Prior to 1/1/10, cash was allocated to carve-out segments on apro-rata basis based on beginning of period market values. Beginning 1/1/10, carve-out segments are managed separately with their own cash balance.Carve-out accounts represent 100% of composite assets for periods prior to 1/1/10.

The standard management fee for the Altrius Disciplined Alpha Dividend Strategy is 1.40% per annum on the first $500,000 USD, 1.00% perannum on the next $500,000 and 0.80% per annum thereafter. Additional information regarding Altrius Capital Management and AltriusInstitutional Asset Management fees are included in its Part II Form ADV.

Internal dispersion is calculated using the asset-weighted standard deviation of all accounts included in the composite for the entire year; it is notpresented for periods less than one year or when there were five or fewer portfolios in the composite for the entire year. The three-year annualized standarddeviation measures the variability of the composite and the benchmark (Russell 1000 Value Index) returns over the preceding 36-month period.

There are no non-fee paying accounts in our composites. When a security is purchased or sold, the principal amounts tied to the transaction are netof trading costs; therefore the calculation and market values represent amounts net of trading costs. Dispersion is calculated using Asset WeightedStandard Deviation, gross of fees. Policies for valuing portfolios, calculating performance, and preparing compliant presentations are available uponrequest.

* Past performance does not guarantee future results. The information provided in this material should not be considered an offer nora recommendation to buy, sell or hold any particular security.

DisclosureDISCLOSURE

Q1 201935

Worldwide:

Raleigh:

New Bern:

New Jersey:

Contact Information

Toll Free: 855-ALTRIUSEmail Address: [email protected]

Altrius Capital Management51 JFK Parkway, First Floor WestShort Hills, NJ 07078Phone: 201-399-0580

Altrius Capital Management4819 Emperor Blvd., Suite 400Durham, NC 27703Phone: 919-746-7977

Altrius Capital Management1323 Commerce DriveNew Bern, NC 28562Phone: 252-638-7598Fax: 252-635-6739

mailto:[email protected]

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Disciplined Alpha Dividend Income Strategy - Altrius · 2019-04-12 · Disciplined Alpha Dividend...

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