Description
U.S. Investment Policy Committee Notes
December 16, 2015
Economic and Stock Market Outlooks
Overall Outlook
Recommended Moderate Allocation
Like unwrapping the holiday gift that had been repeatedly requested, the markets breathed a
sigh of relief when the Fed raised the fed funds rate by 25 basis points in a unanimous vote, and
accompanied the moves with a dovish statement. The dot-plot suggests four quarter-point hikes
next year, according to Action Economics, while the median long-run funds rate is seen at 3.5%.
Investors will closely watch the stock market's reaction to the highly anticipated rate hike over
the coming days. Our expectation is that the lifting of the veil of uncertainty will pave the way for
an end-of-year gain in share prices.
Should this rally not materialize, the old adage popularized by The Stock Trader's Almanac will likely be chanted: "If Santa Claus should fail to call, bears may come to Broad and Wall." 15% Fo re ig n Eq u itie s 4 5 % U.S. Eq u itie s 2 5 % Bo n d s Economic Update Today, U.S. economic reports revealed a large drop of 0.6% to November industrial production, versus an expected 0.1% decline, with hits from the "El Nino" influenced winter and an associated utility sector drop, and a now-routine plunge in the mining sector. In addition, capacity utilization rose to 77.0% versus the 77.4% estimate.
On net, these reports were disappointing, as industrial production growth has slowed to an estimated 1.3% rate in 2015, and is expected to advance just 1% or less in 2016 despite our much higher GDP estimates in both years. Offsetting this disappointing data, housing starts surged 10.5% in November to a 1.173 million units, versus the expected 1.133M pace. In addition, the jump in starts was accompanied by a larger 11.0% pop in building permits, as mild weather proved to be more helpful for housing. Fundamental Update Buybacks continue to impact the index weights: S&P Dow Jones Indices recently reminded us that the S&P 500 share rebalancing will occur at the close of trading on December 18, 2015, based on the December 11, closing values.
On 12/18, 188 issues will increase their index share counts (down from 194 in Q3, 2015 and 206 in Q4, 2014). At the same time, 288 will decrease their share counts (288 also decreased counts in Q3,'15, while 270 did so in Q4,'14). The actual S&P 500 share count will decline by 0.47% (it decreased 1.01% in Q3,'15), as none of the 10 sectors added shares.
The consumer discretionary sector will see the smallest reduction in share count at -0.016%, while Materials will experience the greatest reduction in count at -0.864%. The actual S&P 500 market value will decrease by -0.50%, versus the addition of 0.24% in Q3,'15). 1 5 % Ca s h S&P 500 EPS changes as of 12/16/15 EPS Growth % S&P 500 Sector Q3 2015 Q4 2015e Technical Update Targets The S&P 500 index declined to test 1990 before rotating back to the upside. While above 1990, the bias remains rotational with resistance beginning at 2077-2092.
A breach of 1990 would suggest further decline to lower support at 1937-1963. The index must surmount 2115 to shift into a bullish position. The Russell 2000 has breached critical support at 1135, which is a negative for stocks as a whole and shifted the bias in this index to bearish.
The zone at 1149-1166 is now resistance on any rally attempt. While below this zone, the next downside target is a retest of the October lows at 1078. Separately, the 10-year yield remains below resistance at 2.407 and above support at 1.91-1.975.
The bias is rotational while between these zones. Further rotational price action is expected until one of these levels is exceeded. 12-Month S&P 500:2250 S&P 500 EPS '15E:$117.00, 16E:$126.19 S&P 500 Revenues '15E:-2.1%, 16E:+5.4% S&P Euro 350 EPS '15E:+7.1%, 16E:+6.5% Real GDP Growth 2015E:2.5%, 16E:2.7% Core CPI 2015E:1.8%, 16E:1.9% Fed Funds Rate 2015E:0.1%, 16E:0.8% 10-Year T-Note 2015E:2.2%, 16E:2.7% WTI/bbl. Avg.
'15E:$50.24, 16E:$53.23 S&P 500 GICS Sector Performance and Recommended Sector Weightings 12/15/2015 Dec YTD 2014 P/E on '16e EPS '16e P/E to Proj. 5-Yr. EPS Grth. (2.5) 1.5 (7.8) (2.0) 0.7 (3.2) (1.5) (4.7) 0.0 (1.3) 8.9 2.7 (21.7) (3.1) 4.3 (5.7) 5.1 (10.6) (3.4) (11.2) 8.0 12.9 (10.0) 13.1 23.3 7.5 18.2 4.7 (1.9) 24.3 18.2 19.6 27.1 13.4 15.8 15.3 16.0 15.0 12.1 15.0 0.9 2.4 (13.0) 1.4 1.4 1.4 1.2 1.4 2.0 2.9 (1.1) (0.8) (3.9) (3.4) 10.9 11.4 8.2 4.4 % Change S&P 500 Sector Consumer Discretionary Consumer Staples Energy Financials Health Care Industrials Information Technology Materials Telecommunication Services Utilities S&P Composite 1500 S&P 500 S&P MidCap 400 S&P SmallCap 600 2015e 2016e Consumer Disc. 16.4 7.6 9.7 14.8 Consumer Staples (1.5) (3.9) 0.0 6.6 Energy (58.6) (66.8) (59.6) (4.2) Financials 1.2 2.4 8.9 8.7 Health Care 15.1 5.8 13.5 9.3 Industrials 5.3 0.4 3.8 4.9 Info. Technology 5.2 (4.6) 3.4 8.6 Materials (14.6) (21.6) (4.8) 13.2 Telecom.
Services 14.6 18.1 12.0 1.9 Utilities 1.6 (0.9) 2.5 3.1 S&P 500 (1.4) (4.8) (0.6) 8.0 Source: S&P Capital IQ (2.1) (1.8) (4.5) (5.0) 16.3 16.2 17.5 18.3 1.4 1.4 1.5 1.3 Sector % Weightings 13.0 9.9 6.6 16.5 15.0 10.0 21.0 2.8 2.4 2.9 S&P Sector Emphasis Overweight Marketweight Underweight Marketweight Overweight Marketweight Marketweight Underweight Overweight Underweight Over/Under Weight 0.4 0.0 -0.8 0.0 0.4 0.0 0.0 -0.3 0.5 -0.2 Sector recommendations are market-cap weighted, influenced by economic,fundamental and technical considerations Technical commentary contributed by i10 Research. Please read the Required Disclosures from page 2 onwards of this report. 1 . Glossary STARS Ranking system and definition: ★★★★★ 5-STARS (Strong Buy): Total return is expected to outperform the total return of a relevant benchmark, by a wide margin over the coming 12 months, with shares rising in price on an absolute basis. ★★★★☆ 4-STARS (Buy): Total return is expected to outperform the total return of a relevant benchmark over the coming 12 months, with shares rising in price on an absolute basis. ★★★☆☆ 3-STARS (Hold): Total return is expected to closely approximate the total return of a relevant benchmark over the coming 12 months, with shares generally rising in price on an absolute basis. ★★☆☆☆ 2-STARS (Sell): Total return is expected to underperform the total return of a relevant benchmark over the coming 12 months, and the share price not anticipated to show a gain. ★☆☆☆☆ 1-STAR (Strong Sell): Total return is expected to underperform the total return of a relevant benchmark by a wide margin over the coming 12 months, with shares falling in price on an absolute basis. S&P Capital Ranking Definitions: Overweight rankings are assigned to approximately the top quartile of the asset class. Marketweight rankings are assigned to approximately the second and third quartiles of the asset class. Underweight rankings are assigned to approximately the bottom quartile of the asset class. S&P Capital IQ Quality Ranking Growth and stability of earnings and dividends are deemed key elements in establishing S&P Capital IQ's earnings and dividend rankings for common stocks, which are designed to capsulize the nature of this record in a single symbol. It should be noted, however, that the process also takes into consideration certain adjustments and modifications deemed desirable in establishing such rankings. The final score for each stock is measured against a scoring matrix determined by analysis of the scores of a large and representative sample of stocks. The range of scores in the array of this sample has been aligned with the following ladder of ranking. A+ Highest A High A- Above Average B+ Average B Below Average B- Lower C Lowest D In Reorganization Required Disclosures Global Markets Intelligence (“GMI”) is a business unit of S&P Capital IQ.
Standard & Poor’s Investment Advisory Services LLC (“SPIAS”) and McGraw-Hill Financial Research Europe Limited (“MHFRE”) (collectively, “GMI Investment Advisory Services” or “GMI IAS”), each a wholly owned subsidiary of McGraw Hill Financial, Inc., operate under the GMI brand. GMI IAS provides non-discretionary advisory services to institutional clients and does not provide advice to underlying clients of the firms to which it provides advisory services. In the United States, advisory services are offered by SPIAS, which is authorized and regulated by the U.S.
Securities and Exchange Commission. SPIAS does not act as a "fiduciary" or as an "investment manager", as defined under Employee Retirement Income Security Act (ERISA), to any investor. MHFRE, is authorized and regulated by the Financial Conduct Authority in the United Kingdom.
Under the Markets in Financial Instruments Directive (‘MiFID’), MHFRE is entitled to exercise a passport right to provide cross border investment advice to European Economic Area (‘EEA’) States. MHFRE has duly notified the Financial Conduct Authority in the United Kingdom of its intention to provide cross border investment advice in EEA States in accordance with MiFID. MHFRE trades as S&P Capital IQ, does not provide services to “retail clients” and only has “professional clients” as defined under MiFID.
In the United Kingdom to the extent the material is a financial promotion it is issued and approved by MHFRE. In Hong Kong, advisory services are offered by Standard & Poor's Investment Advisory Services (HK) Limited (“SPIAS HK”), which is regulated by the Hong Kong Securities and Futures Commission; in Singapore, by McGraw-Hill Financial Singapore Pte. Limited ("MHFSPL"), which is regulated by the Monetary Authority of Singapore; in Malaysia, by Standard & Poor's Malaysia Sdn Bhd (“S&P Malaysia”), which is regulated by the Securities Commission of Malaysia; and in Australia, by Standard & Poor's Information Services (Australia) Pty Ltd ("SPIS"), which is regulated by the Australian Securities & Investments Commission.
In Korea, SPIAS holds a cross-border non-discretionary investment adviser license and it is registered with the Financial Supervisory Service (FSS). SPIAS, MHFRE, SPIAS HK, MHFSPL, S&P Malaysia and SPIS, each a wholly owned subsidiary of McGraw Hill Financial, Inc. operate under the GMI brand. GMI IAS offers four broad categories of investment advice: (i) portfolio strategies; (ii) fund research and recommendations; (iii) asset allocation; and (iv) analyses of certain U.S.
and European fixed income securities using its proprietary Risk-to-Price scoring methodology. GMI IAS’ model portfolios (“model(s)”) are not collective investment funds. Assets managed in accordance with the models may lose money.
GMI IAS is not responsible for client suitability and or the appropriateness of the service for the client. Any performance data quoted represents past performance. Past performance is not indicative of future returns. With respect to the investment recommendations made by GMI IAS, investors should realize that such investment recommendations are provided only as a general guideline. There is no agreement or understanding whatsoever that GMI IAS will provide individualized advice to any investor.
GMI IAS is not responsible for client suitability. GMI IAS does not take into account any information about any investor or any investor’s assets when providing investment advice. GMI IAS does not have any discretionary authority or control with respect to purchasing or selling securities or making other investments. Individual investors should ultimately rely on their own judgment and/or the judgment of a financial advisor in making their investment decisions.
Investments are subject to investment risks including the possible loss of the principal amount invested. An investment based upon GMI IAS’ investment advice should only be made after consulting with a financial advisor and with an understanding of the risks associated with any investment in securities, including, but not limited to, market risk, currency risk, interest rate risk and foreign investment risk. SPIAS, MHFRE and its affiliates (collectively, S&P) and any third-party providers, as well as their directors, officers, 2 . shareholders, employees or agents (collectively S&P Parties) do not guarantee the accuracy, completeness, timeliness or availability of the Content. S&P Parties are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, for the results obtained from the use of the Content, or for the security or maintenance of any data input by the user. The Content is provided on an “as is” basis. S&P PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, FREEDOM FROM BUGS, SOFTWARE ERRORS OR DEFECTS, THAT THE CONTENT’S FUNCTIONING WILL BE UNINTERRUPTED OR THAT THE CONTENT WILL OPERATE WITH ANY SOFTWARE OR HARDWARE CONFIGURATION.
In no event shall S&P Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs or losses caused by negligence) in connection with any use of the Content even if advised of the possibility of such damages. may differ among credit rating agencies. Ratings assigned by other credit rating agencies may reflect more or less favorable opinions of creditworthiness than ratings assigned by Standard & Poor’s Ratings Services. For more detailed descriptions of disclosures and disclaimers such as investment risk and country conditions, please see: http://www.spcapitaliq.com/disclaimers/spias-investmentadvisory-services Copyright © 2015 by Standard & Poor’s Financial Services, LLC. Redistribution, reproduction and/or photocopying in whole or in part is prohibited without written permission. All rights reserved. STANDARD & POOR’S, S&P and S&P 500 are registered trademarks of Standard & Poor’s Financial Services LLC. CAPITAL IQ is a registered trademark of Capital IQ, Inc.
S&P CAPITAL IQ is a trademark of Standard & Poor’s Financial Services LLC. Based on a universe of funds provided to SPIAS, SPIAS may include in a model portfolio or substitution list, if applicable, otherwise present as an investment option and/or recommend for investment certain funds to which S&P licenses certain intellectual property or otherwise has a financial interest, including exchangetraded funds whose investment objective is to substantially replicate the returns of a proprietary S&P Dow Jones Indices, such as the S&P 500. SPIAS includes these funds in models, otherwise presents them as an investment option and/or recommends them for investment based on asset allocation, sector representation, liquidity and other factors; however, SPIAS has a potential conflict of interest with respect to the inclusion of these funds. In cases where S&P is paid fees that are tied to the amount of assets that are invested in the fund or the volume of trading activity in the fund, investment in the fund will generally result in S&P receiving compensation in addition to the subscription fees or other compensation for services rendered by SPIAS. Standard & Poor’s Ratings Services does not contribute to or participate in the provision of investment advice and or model portfolios.
Standard & Poor’s Ratings Services may receive compensation for its ratings and certain analyses, normally from issuers or underwriters of securities or from obligors. S&P reserves the right to disseminate its opinions and analyses. S&P's public ratings and analyses are made available on its Web sites, www.standardandpoors.com (free of charge), and www.ratingsdirect.com and www.globalcreditportal.com (subscription), and may be distributed through other means, including via S&P publications and third-party redistributors. Additional information about our ratings fees is available at: www.standardandpoors.com/usratingsfees. GMI IAS may consider research and other information from affiliates in making its investment recommendations. The investment policies of certain model portfolios specifically state that among the information GMI IAS will consider in evaluating a security are the credit ratings assigned by Standard & Poor’s Ratings Services.
GMI IAS does not consider the ratings assigned by other credit rating agencies. Credit rating criteria and scales 3 .
Should this rally not materialize, the old adage popularized by The Stock Trader's Almanac will likely be chanted: "If Santa Claus should fail to call, bears may come to Broad and Wall." 15% Fo re ig n Eq u itie s 4 5 % U.S. Eq u itie s 2 5 % Bo n d s Economic Update Today, U.S. economic reports revealed a large drop of 0.6% to November industrial production, versus an expected 0.1% decline, with hits from the "El Nino" influenced winter and an associated utility sector drop, and a now-routine plunge in the mining sector. In addition, capacity utilization rose to 77.0% versus the 77.4% estimate.
On net, these reports were disappointing, as industrial production growth has slowed to an estimated 1.3% rate in 2015, and is expected to advance just 1% or less in 2016 despite our much higher GDP estimates in both years. Offsetting this disappointing data, housing starts surged 10.5% in November to a 1.173 million units, versus the expected 1.133M pace. In addition, the jump in starts was accompanied by a larger 11.0% pop in building permits, as mild weather proved to be more helpful for housing. Fundamental Update Buybacks continue to impact the index weights: S&P Dow Jones Indices recently reminded us that the S&P 500 share rebalancing will occur at the close of trading on December 18, 2015, based on the December 11, closing values.
On 12/18, 188 issues will increase their index share counts (down from 194 in Q3, 2015 and 206 in Q4, 2014). At the same time, 288 will decrease their share counts (288 also decreased counts in Q3,'15, while 270 did so in Q4,'14). The actual S&P 500 share count will decline by 0.47% (it decreased 1.01% in Q3,'15), as none of the 10 sectors added shares.
The consumer discretionary sector will see the smallest reduction in share count at -0.016%, while Materials will experience the greatest reduction in count at -0.864%. The actual S&P 500 market value will decrease by -0.50%, versus the addition of 0.24% in Q3,'15). 1 5 % Ca s h S&P 500 EPS changes as of 12/16/15 EPS Growth % S&P 500 Sector Q3 2015 Q4 2015e Technical Update Targets The S&P 500 index declined to test 1990 before rotating back to the upside. While above 1990, the bias remains rotational with resistance beginning at 2077-2092.
A breach of 1990 would suggest further decline to lower support at 1937-1963. The index must surmount 2115 to shift into a bullish position. The Russell 2000 has breached critical support at 1135, which is a negative for stocks as a whole and shifted the bias in this index to bearish.
The zone at 1149-1166 is now resistance on any rally attempt. While below this zone, the next downside target is a retest of the October lows at 1078. Separately, the 10-year yield remains below resistance at 2.407 and above support at 1.91-1.975.
The bias is rotational while between these zones. Further rotational price action is expected until one of these levels is exceeded. 12-Month S&P 500:2250 S&P 500 EPS '15E:$117.00, 16E:$126.19 S&P 500 Revenues '15E:-2.1%, 16E:+5.4% S&P Euro 350 EPS '15E:+7.1%, 16E:+6.5% Real GDP Growth 2015E:2.5%, 16E:2.7% Core CPI 2015E:1.8%, 16E:1.9% Fed Funds Rate 2015E:0.1%, 16E:0.8% 10-Year T-Note 2015E:2.2%, 16E:2.7% WTI/bbl. Avg.
'15E:$50.24, 16E:$53.23 S&P 500 GICS Sector Performance and Recommended Sector Weightings 12/15/2015 Dec YTD 2014 P/E on '16e EPS '16e P/E to Proj. 5-Yr. EPS Grth. (2.5) 1.5 (7.8) (2.0) 0.7 (3.2) (1.5) (4.7) 0.0 (1.3) 8.9 2.7 (21.7) (3.1) 4.3 (5.7) 5.1 (10.6) (3.4) (11.2) 8.0 12.9 (10.0) 13.1 23.3 7.5 18.2 4.7 (1.9) 24.3 18.2 19.6 27.1 13.4 15.8 15.3 16.0 15.0 12.1 15.0 0.9 2.4 (13.0) 1.4 1.4 1.4 1.2 1.4 2.0 2.9 (1.1) (0.8) (3.9) (3.4) 10.9 11.4 8.2 4.4 % Change S&P 500 Sector Consumer Discretionary Consumer Staples Energy Financials Health Care Industrials Information Technology Materials Telecommunication Services Utilities S&P Composite 1500 S&P 500 S&P MidCap 400 S&P SmallCap 600 2015e 2016e Consumer Disc. 16.4 7.6 9.7 14.8 Consumer Staples (1.5) (3.9) 0.0 6.6 Energy (58.6) (66.8) (59.6) (4.2) Financials 1.2 2.4 8.9 8.7 Health Care 15.1 5.8 13.5 9.3 Industrials 5.3 0.4 3.8 4.9 Info. Technology 5.2 (4.6) 3.4 8.6 Materials (14.6) (21.6) (4.8) 13.2 Telecom.
Services 14.6 18.1 12.0 1.9 Utilities 1.6 (0.9) 2.5 3.1 S&P 500 (1.4) (4.8) (0.6) 8.0 Source: S&P Capital IQ (2.1) (1.8) (4.5) (5.0) 16.3 16.2 17.5 18.3 1.4 1.4 1.5 1.3 Sector % Weightings 13.0 9.9 6.6 16.5 15.0 10.0 21.0 2.8 2.4 2.9 S&P Sector Emphasis Overweight Marketweight Underweight Marketweight Overweight Marketweight Marketweight Underweight Overweight Underweight Over/Under Weight 0.4 0.0 -0.8 0.0 0.4 0.0 0.0 -0.3 0.5 -0.2 Sector recommendations are market-cap weighted, influenced by economic,fundamental and technical considerations Technical commentary contributed by i10 Research. Please read the Required Disclosures from page 2 onwards of this report. 1 . Glossary STARS Ranking system and definition: ★★★★★ 5-STARS (Strong Buy): Total return is expected to outperform the total return of a relevant benchmark, by a wide margin over the coming 12 months, with shares rising in price on an absolute basis. ★★★★☆ 4-STARS (Buy): Total return is expected to outperform the total return of a relevant benchmark over the coming 12 months, with shares rising in price on an absolute basis. ★★★☆☆ 3-STARS (Hold): Total return is expected to closely approximate the total return of a relevant benchmark over the coming 12 months, with shares generally rising in price on an absolute basis. ★★☆☆☆ 2-STARS (Sell): Total return is expected to underperform the total return of a relevant benchmark over the coming 12 months, and the share price not anticipated to show a gain. ★☆☆☆☆ 1-STAR (Strong Sell): Total return is expected to underperform the total return of a relevant benchmark by a wide margin over the coming 12 months, with shares falling in price on an absolute basis. S&P Capital Ranking Definitions: Overweight rankings are assigned to approximately the top quartile of the asset class. Marketweight rankings are assigned to approximately the second and third quartiles of the asset class. Underweight rankings are assigned to approximately the bottom quartile of the asset class. S&P Capital IQ Quality Ranking Growth and stability of earnings and dividends are deemed key elements in establishing S&P Capital IQ's earnings and dividend rankings for common stocks, which are designed to capsulize the nature of this record in a single symbol. It should be noted, however, that the process also takes into consideration certain adjustments and modifications deemed desirable in establishing such rankings. The final score for each stock is measured against a scoring matrix determined by analysis of the scores of a large and representative sample of stocks. The range of scores in the array of this sample has been aligned with the following ladder of ranking. A+ Highest A High A- Above Average B+ Average B Below Average B- Lower C Lowest D In Reorganization Required Disclosures Global Markets Intelligence (“GMI”) is a business unit of S&P Capital IQ.
Standard & Poor’s Investment Advisory Services LLC (“SPIAS”) and McGraw-Hill Financial Research Europe Limited (“MHFRE”) (collectively, “GMI Investment Advisory Services” or “GMI IAS”), each a wholly owned subsidiary of McGraw Hill Financial, Inc., operate under the GMI brand. GMI IAS provides non-discretionary advisory services to institutional clients and does not provide advice to underlying clients of the firms to which it provides advisory services. In the United States, advisory services are offered by SPIAS, which is authorized and regulated by the U.S.
Securities and Exchange Commission. SPIAS does not act as a "fiduciary" or as an "investment manager", as defined under Employee Retirement Income Security Act (ERISA), to any investor. MHFRE, is authorized and regulated by the Financial Conduct Authority in the United Kingdom.
Under the Markets in Financial Instruments Directive (‘MiFID’), MHFRE is entitled to exercise a passport right to provide cross border investment advice to European Economic Area (‘EEA’) States. MHFRE has duly notified the Financial Conduct Authority in the United Kingdom of its intention to provide cross border investment advice in EEA States in accordance with MiFID. MHFRE trades as S&P Capital IQ, does not provide services to “retail clients” and only has “professional clients” as defined under MiFID.
In the United Kingdom to the extent the material is a financial promotion it is issued and approved by MHFRE. In Hong Kong, advisory services are offered by Standard & Poor's Investment Advisory Services (HK) Limited (“SPIAS HK”), which is regulated by the Hong Kong Securities and Futures Commission; in Singapore, by McGraw-Hill Financial Singapore Pte. Limited ("MHFSPL"), which is regulated by the Monetary Authority of Singapore; in Malaysia, by Standard & Poor's Malaysia Sdn Bhd (“S&P Malaysia”), which is regulated by the Securities Commission of Malaysia; and in Australia, by Standard & Poor's Information Services (Australia) Pty Ltd ("SPIS"), which is regulated by the Australian Securities & Investments Commission.
In Korea, SPIAS holds a cross-border non-discretionary investment adviser license and it is registered with the Financial Supervisory Service (FSS). SPIAS, MHFRE, SPIAS HK, MHFSPL, S&P Malaysia and SPIS, each a wholly owned subsidiary of McGraw Hill Financial, Inc. operate under the GMI brand. GMI IAS offers four broad categories of investment advice: (i) portfolio strategies; (ii) fund research and recommendations; (iii) asset allocation; and (iv) analyses of certain U.S.
and European fixed income securities using its proprietary Risk-to-Price scoring methodology. GMI IAS’ model portfolios (“model(s)”) are not collective investment funds. Assets managed in accordance with the models may lose money.
GMI IAS is not responsible for client suitability and or the appropriateness of the service for the client. Any performance data quoted represents past performance. Past performance is not indicative of future returns. With respect to the investment recommendations made by GMI IAS, investors should realize that such investment recommendations are provided only as a general guideline. There is no agreement or understanding whatsoever that GMI IAS will provide individualized advice to any investor.
GMI IAS is not responsible for client suitability. GMI IAS does not take into account any information about any investor or any investor’s assets when providing investment advice. GMI IAS does not have any discretionary authority or control with respect to purchasing or selling securities or making other investments. Individual investors should ultimately rely on their own judgment and/or the judgment of a financial advisor in making their investment decisions.
Investments are subject to investment risks including the possible loss of the principal amount invested. An investment based upon GMI IAS’ investment advice should only be made after consulting with a financial advisor and with an understanding of the risks associated with any investment in securities, including, but not limited to, market risk, currency risk, interest rate risk and foreign investment risk. SPIAS, MHFRE and its affiliates (collectively, S&P) and any third-party providers, as well as their directors, officers, 2 . shareholders, employees or agents (collectively S&P Parties) do not guarantee the accuracy, completeness, timeliness or availability of the Content. S&P Parties are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, for the results obtained from the use of the Content, or for the security or maintenance of any data input by the user. The Content is provided on an “as is” basis. S&P PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, FREEDOM FROM BUGS, SOFTWARE ERRORS OR DEFECTS, THAT THE CONTENT’S FUNCTIONING WILL BE UNINTERRUPTED OR THAT THE CONTENT WILL OPERATE WITH ANY SOFTWARE OR HARDWARE CONFIGURATION.
In no event shall S&P Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs or losses caused by negligence) in connection with any use of the Content even if advised of the possibility of such damages. may differ among credit rating agencies. Ratings assigned by other credit rating agencies may reflect more or less favorable opinions of creditworthiness than ratings assigned by Standard & Poor’s Ratings Services. For more detailed descriptions of disclosures and disclaimers such as investment risk and country conditions, please see: http://www.spcapitaliq.com/disclaimers/spias-investmentadvisory-services Copyright © 2015 by Standard & Poor’s Financial Services, LLC. Redistribution, reproduction and/or photocopying in whole or in part is prohibited without written permission. All rights reserved. STANDARD & POOR’S, S&P and S&P 500 are registered trademarks of Standard & Poor’s Financial Services LLC. CAPITAL IQ is a registered trademark of Capital IQ, Inc.
S&P CAPITAL IQ is a trademark of Standard & Poor’s Financial Services LLC. Based on a universe of funds provided to SPIAS, SPIAS may include in a model portfolio or substitution list, if applicable, otherwise present as an investment option and/or recommend for investment certain funds to which S&P licenses certain intellectual property or otherwise has a financial interest, including exchangetraded funds whose investment objective is to substantially replicate the returns of a proprietary S&P Dow Jones Indices, such as the S&P 500. SPIAS includes these funds in models, otherwise presents them as an investment option and/or recommends them for investment based on asset allocation, sector representation, liquidity and other factors; however, SPIAS has a potential conflict of interest with respect to the inclusion of these funds. In cases where S&P is paid fees that are tied to the amount of assets that are invested in the fund or the volume of trading activity in the fund, investment in the fund will generally result in S&P receiving compensation in addition to the subscription fees or other compensation for services rendered by SPIAS. Standard & Poor’s Ratings Services does not contribute to or participate in the provision of investment advice and or model portfolios.
Standard & Poor’s Ratings Services may receive compensation for its ratings and certain analyses, normally from issuers or underwriters of securities or from obligors. S&P reserves the right to disseminate its opinions and analyses. S&P's public ratings and analyses are made available on its Web sites, www.standardandpoors.com (free of charge), and www.ratingsdirect.com and www.globalcreditportal.com (subscription), and may be distributed through other means, including via S&P publications and third-party redistributors. Additional information about our ratings fees is available at: www.standardandpoors.com/usratingsfees. GMI IAS may consider research and other information from affiliates in making its investment recommendations. The investment policies of certain model portfolios specifically state that among the information GMI IAS will consider in evaluating a security are the credit ratings assigned by Standard & Poor’s Ratings Services.
GMI IAS does not consider the ratings assigned by other credit rating agencies. Credit rating criteria and scales 3 .
