Investment Philosophy
For over 30 years, NFJ has followed a disciplined, value-oriented approach to managing assets for clients. We believe valuation is paramount to outperformance. In our view, risk is not inherent to an asset, but relative to the price paid for that asset. To the extent that we are able to better understand how to value what we buy, we can better manage the risk of the portfolios we construct. We believe a diversified portfolio of attractively valued stocks that exhibit higher-quality fundamental characteristics and return value to shareholders should outperform over time. Our conviction comes from a combination of quantitative parameters that strive to eliminate emotional bias, analysis of company fundamentals, and strict adherence to our process.
How We Invest: Our Modern Value Approach
Our bottom-up stock selection process employs fundamental research to identify companies with the most compelling valuations in their industries. Data has always been at the heart of our approach, and we have continued to build on this strength by integrating big data and data analytics to our process. In today’s environment, speed of execution on ideas can provide an edge. Our team has the ability to mine through large data sets quickly and efficiently and take advantage of windows of opportunity that present themselves across all market conditions.
THE NFJ VALUE DIFFERENCE
NFJ’s disciplined process, honed over 30 years, revolves around three core investment tenets — innovative valuation, risk management, and an emphasis on quality, income, and growth — which the investment team believes are essential ingredients to intelligent portfolio construction and the generation of alpha.
Innovative Approach to Valuation
- Valuation is paramount to delivering outperformance
- Refined proprietary process driven by big data and data analytics to increase efficiency
Focus on Risk Management
- Quantitative tools and qualitative assessment identify investment candidates with attractive risk/reward characteristics
- Risk-aware at every step of process: initial parameters/focus on quality, diversification, portfolio construction
- Actively seek to manage risk at stock and portfolio levels
Quality, Income, and Growth
- Fundamentals that reflect economic moat
- Earnings consistency and stability
- ROE, ROA, and dividend growth
- Focus is on income generation
- Not absolute dividend yield
- Growing dividends
Intelligent Portfolio Construction
- Alpha generation begins with intelligent portfolio construction
- Diversification avoids idiosyncratic risks
- Guides every buy / sell decision
- Optimizes downside capture