A Core US Stock Portfolio
The Allianz Disciplined US Core Equity is a large-cap, core strategy characterized by a bottom-up, fundamentally driven stock-selection approach. The management team builds a portfolio composed primarily of US large-cap companies, with some exposure to mid-cap stocks when quality opportunities are uncovered; the portfolio is also diversified across major industry groups. The managed account portfolio's US core strategy may appeal to investors who want to gain exposure to quality domestic companies, rather than choose between “growth” and “value” investment styles.
The Allianz Disciplined US Core Equity strategy is managed on a team basis with the ultimate decision making responsibility resting with senior portfolio manager and CIO Disciplined Equities Seung Minn, who has been the lead portfolio manager since November 1998. The members of the Portfolio Management Team (“the Team”) work together closely, sharing portfolio management responsibilities and undertaking company research as generalists. The Team also benefits from Allianz Global Investors' robust research platform, comprising approximately 80 analysts who each conduct an average of 100 annual meetings with corporate management at key companies. This fundamental research is complemented by unique Grassroots Research, which combines an in-house staff, over 350 independent researchers and more than 50,000 industry contacts to gather on-the-ground market intelligence.
The Allianz Disciplined US Core Equity strategy invests in undervalued companies undergoing positive change. We believe investor sentiment fluctuates more widely than underlying fundamentals, and that low expectations/valuations provide more downside risk protection and more upside potential. This results in mispricing opportunities. We are able to identify these opportunities through our disciplined investment process, which is built upon stock screening and fundamental research.
- Screening for Idea Generation: The investment process begins by employing a screening strategy that reflects our investment philosophy. From the resulting set of ideas, the Team selects a few attractive stocks for further research.
- Company Research: The Team conducts its own company research. Our research efforts focus on a variety of Growth Drivers (such as barriers to entry, pricing power, sustainable earnings growth and new product cycles) and Quality Drivers (such as quality of management, well-capitalized balance sheet, and favorable cash flow outlook).
- Equity Valuation: Our Equity Valuation work calculates upside and downside target prices. We focus on the downside risk first and then we consider the upside potential. We believe that having a low potential downside increases the margin of safety, and helps us build conviction for investing in out-of-favor stocks (low-expectation stocks).
- Bottom-Up Risk Aware Portfolio Construction: The portfolio is constructed from the bottom-up with the most attractive stocks that are identified by the Team, while considering the portfolio’s active risk vs. the benchmark. The number of stocks held in the portfolio typically ranges from 40 to 80 stocks. Annual turnover is targeted at 40% to 50% (our average holding period target is about 2-3 years).