Description
U.S. Investment Policy Committee Notes
January 06, 2016
Economic and Stock Market Outlooks
Overall Outlook
Recommended Moderate Allocation
The frantic question most frequently asked after the close of business on January 4 was whether
the sharp decline was an ominous omen for the rest of the year. To offset emotion, one
frequently turns to data. There have been nine times since WWII in which the S&P 500 fell by 1%
or more on the opening day of trading.
In six of those years, the market was higher on the month, and up for the full year. For all observations, the 500 recorded a calendar-year advance of 6.2%. Separately, the S&P 500 posted a YTD decline in 87% of all calendar years since 1945. Also, one-third of all YTD lows were set in January, nearly three times as much as October, which saw the second-highest number of YTD lows.
Therefore history suggests, but does not guarantee, that investors should not expect full-year results to be a reflection of opening day activity. 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 Monday's U.S. economic reports provided an ugly start to 2016, as the ISM-Mfg. report undershot already-lean estimates.
In addition, we saw a weak November construction spending performance, after downward revisions in the important component figures for the prior two months. The ISM fell to a 48.2, which is a new expansion-low from an already-weak 48.6, with a drop in the employment component to 48.1 from 51.3 in November and a six-year low of 47.6 in October. The recent dollar-levels for construction were raised, even though this reflected big revisions in the home improvement residual back to 2005 that won't impact Action Economics' other GDP or construction forecasts.
Their 2.0% Q4 GDP growth estimate faces downside risk, and they lowered their Q4 forecasts for residential and nonresidential construction. Fundamental Update Capital IQ recently reported that aggregate fourth-quarter 2015 S&P 500 earnings are estimated to be $28.89, representing a decline of 5.4% on a year-over-year basis. Only four of the 10 S&P sectors are expected to post positive earnings growth for Q4, with telecommunications (17.9%), consumer discretionary (7.7%) and health care (5.6%) once again leading. The energy sector (-68.3%) continues to heavily weigh on the Index.
Other sectors projected to show earnings declines include materials (-23.8%), information technology (-4.5%), consumer staples (-3.9%), utilities (-1.9%) and industrials (-0.1%). Excluding the energy drag, S&P 500 EPS growth would be up 0.6% in Q4. From a valuation perspective, the S&P 500 is trading at a 16.6 P/E ratio on forward 12-month operating EPS, just above the 16.0 average over the past 15 years. 1 5 % Ca s h S&P 500 EPS changes as of 01/06/16 EPS Growth % S&P 500 Sector Q4 2015 Q1 2016e Technical Update Targets The S&P 500 index was met with selling once again as it tested the zone of resistance at 2077-2092.
The move below 2044 was the indication that the rally had failed and targeted a return to recent lows at 1990. At this point, any breach of 1990 would be a bearish near-term development and target next target lower support at 1937-63 and possibly lower. The Nasdaq 100 and Russell 2000 were also hit with selling from their respective zones of resistance.
The Russell 2000 remains in a bearish position with support at the prior low at 1078. Any breach of 1078 would be a negative for stocks as a whole and target 1040. Separately, the US Dollar Index remains rotational with resistance at 100.785 and support at 96.650-97.570.
A move above 100.785 would shift the bias to bullish, while a decline below 96.65 would be bearish. 12-Month S&P 500:2250 S&P 500 EPS 2015E:$116.93, 16E:$125.64 S&P 500 Revenues 2015E:-2.4%, 16E:+4.8% S&P Euro 350 EPS 2015E:+6.8%, 16E:+6.0% Real GDP Growth Avg. 2016E:2.7%, 17E:2.6% Core CPI Avg. 2016E:1.9%, 17E:2.0% Fed Funds Rate Avg.
2016E:0.8%, 17E:2.1% 10-Year T-Note Avg. 2016E:2.7%, 17E:3.6% WTI/bbl. Avg.
2016E:$46, 17E:$52 S&P 500 GICS Sector Performance and Recommended Sector Weightings 1/05/2016 Jan YTD 2015 P/E on '16e EPS '16e P/E to Proj. 5-Yr. EPS Grth. (2.0) (0.6) 0.4 (1.7) (1.4) (1.2) (2.0) (1.7) 0.5 0.5 (2.0) (0.6) 0.4 (1.7) (1.4) (1.2) (2.0) (1.7) 0.5 0.5 8.4 3.8 (23.6) (3.5) 5.2 (4.7) 4.3 (10.4) (1.7) (8.4) 17.8 19.7 26.9 13.2 15.8 15.3 15.7 15.0 12.4 15.5 0.9 2.4 (15.9) 1.4 1.3 1.4 1.1 1.4 2.1 3.0 % 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. 7.7 15.7 12.2 11.8 Consumer Staples (3.9) 2.0 (0.1) 6.5 Energy (68.3) (42.7) (59.8) (5.0) Financials 0.6 2.2 8.5 8.7 Health Care 5.6 6.2 13.3 9.4 Industrials (0.1) (0.1) 3.6 5.0 Info. Technology (4.5) 1.7 3.5 7.7 Materials (23.8) 3.1 (5.5) 12.7 Telecom.
Services 17.9 5.6 11.8 1.5 Utilities (1.9) 2.5 2.4 3.2 S&P 500 (5.4) 1.2 (0.6) 7.4 Source: S&P Capital IQ (1.4) (1.3) (1.3) (2.1) (1.4) (1.3) (1.3) (2.1) (1.0) (0.7) (3.7) (3.4) 16.2 16.1 17.4 18.0 1.4 1.4 1.5 1.2 Sector % Weightings 12.8 10.1 6.6 16.5 15.1 10.1 20.5 2.8 2.5 3.0 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 .
In six of those years, the market was higher on the month, and up for the full year. For all observations, the 500 recorded a calendar-year advance of 6.2%. Separately, the S&P 500 posted a YTD decline in 87% of all calendar years since 1945. Also, one-third of all YTD lows were set in January, nearly three times as much as October, which saw the second-highest number of YTD lows.
Therefore history suggests, but does not guarantee, that investors should not expect full-year results to be a reflection of opening day activity. 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 Monday's U.S. economic reports provided an ugly start to 2016, as the ISM-Mfg. report undershot already-lean estimates.
In addition, we saw a weak November construction spending performance, after downward revisions in the important component figures for the prior two months. The ISM fell to a 48.2, which is a new expansion-low from an already-weak 48.6, with a drop in the employment component to 48.1 from 51.3 in November and a six-year low of 47.6 in October. The recent dollar-levels for construction were raised, even though this reflected big revisions in the home improvement residual back to 2005 that won't impact Action Economics' other GDP or construction forecasts.
Their 2.0% Q4 GDP growth estimate faces downside risk, and they lowered their Q4 forecasts for residential and nonresidential construction. Fundamental Update Capital IQ recently reported that aggregate fourth-quarter 2015 S&P 500 earnings are estimated to be $28.89, representing a decline of 5.4% on a year-over-year basis. Only four of the 10 S&P sectors are expected to post positive earnings growth for Q4, with telecommunications (17.9%), consumer discretionary (7.7%) and health care (5.6%) once again leading. The energy sector (-68.3%) continues to heavily weigh on the Index.
Other sectors projected to show earnings declines include materials (-23.8%), information technology (-4.5%), consumer staples (-3.9%), utilities (-1.9%) and industrials (-0.1%). Excluding the energy drag, S&P 500 EPS growth would be up 0.6% in Q4. From a valuation perspective, the S&P 500 is trading at a 16.6 P/E ratio on forward 12-month operating EPS, just above the 16.0 average over the past 15 years. 1 5 % Ca s h S&P 500 EPS changes as of 01/06/16 EPS Growth % S&P 500 Sector Q4 2015 Q1 2016e Technical Update Targets The S&P 500 index was met with selling once again as it tested the zone of resistance at 2077-2092.
The move below 2044 was the indication that the rally had failed and targeted a return to recent lows at 1990. At this point, any breach of 1990 would be a bearish near-term development and target next target lower support at 1937-63 and possibly lower. The Nasdaq 100 and Russell 2000 were also hit with selling from their respective zones of resistance.
The Russell 2000 remains in a bearish position with support at the prior low at 1078. Any breach of 1078 would be a negative for stocks as a whole and target 1040. Separately, the US Dollar Index remains rotational with resistance at 100.785 and support at 96.650-97.570.
A move above 100.785 would shift the bias to bullish, while a decline below 96.65 would be bearish. 12-Month S&P 500:2250 S&P 500 EPS 2015E:$116.93, 16E:$125.64 S&P 500 Revenues 2015E:-2.4%, 16E:+4.8% S&P Euro 350 EPS 2015E:+6.8%, 16E:+6.0% Real GDP Growth Avg. 2016E:2.7%, 17E:2.6% Core CPI Avg. 2016E:1.9%, 17E:2.0% Fed Funds Rate Avg.
2016E:0.8%, 17E:2.1% 10-Year T-Note Avg. 2016E:2.7%, 17E:3.6% WTI/bbl. Avg.
2016E:$46, 17E:$52 S&P 500 GICS Sector Performance and Recommended Sector Weightings 1/05/2016 Jan YTD 2015 P/E on '16e EPS '16e P/E to Proj. 5-Yr. EPS Grth. (2.0) (0.6) 0.4 (1.7) (1.4) (1.2) (2.0) (1.7) 0.5 0.5 (2.0) (0.6) 0.4 (1.7) (1.4) (1.2) (2.0) (1.7) 0.5 0.5 8.4 3.8 (23.6) (3.5) 5.2 (4.7) 4.3 (10.4) (1.7) (8.4) 17.8 19.7 26.9 13.2 15.8 15.3 15.7 15.0 12.4 15.5 0.9 2.4 (15.9) 1.4 1.3 1.4 1.1 1.4 2.1 3.0 % 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. 7.7 15.7 12.2 11.8 Consumer Staples (3.9) 2.0 (0.1) 6.5 Energy (68.3) (42.7) (59.8) (5.0) Financials 0.6 2.2 8.5 8.7 Health Care 5.6 6.2 13.3 9.4 Industrials (0.1) (0.1) 3.6 5.0 Info. Technology (4.5) 1.7 3.5 7.7 Materials (23.8) 3.1 (5.5) 12.7 Telecom.
Services 17.9 5.6 11.8 1.5 Utilities (1.9) 2.5 2.4 3.2 S&P 500 (5.4) 1.2 (0.6) 7.4 Source: S&P Capital IQ (1.4) (1.3) (1.3) (2.1) (1.4) (1.3) (1.3) (2.1) (1.0) (0.7) (3.7) (3.4) 16.2 16.1 17.4 18.0 1.4 1.4 1.5 1.2 Sector % Weightings 12.8 10.1 6.6 16.5 15.1 10.1 20.5 2.8 2.5 3.0 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 .
