RiverFront Strategas Blue Chip Opportunities Portfolio / RSBCO

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Investment Objective

Seeks to outperform the S&P 500 by investing in domestic equities perceived by the market to have comparable sovereign-like features, specifically low credit default swap (CDS) prices.

Implementation

Stocks

Benchmark

100% S&P 500

Time Horizon

10 years+

EQUITY SOLUTION

Portfolio Objective

The RiverFront Strategas Blue Chip Opportunities portfolio (RSBCO) has an objective to outperform the S&P 500.

RSBCO is based off of the Strategas New Sovereign portfolio model provided by Strategas Asset Management (“SAM””). Strategas’ New Sovereigns Portfolio was constructed on the idea that in times of market stress, investors would seek to shelter capital in the domestic equities that were perceived by the market to have comparable sovereign-like features, specifically low credit default swap (CDS) prices.

Strategas ranks S&P 500 companies with share prices below $1,000 by CDS spreads. Generally, the lowest 50 names are selected each quarter and equally weighted (less 2% frictional cash).

INVESTOR OUTCOME

Accumulate ~ More Conservative

Goal: Build
Outcome: Growth

Over a market cycle, we expect what we see as high quality companies to perform well, which we define as those companies that are capable of growing their earnings when the economy is strengthening and have strong enough balance sheets to allow them to survive any inevitable economic slowdowns. The RiverFront Strategas Blue Chip Opportunities Portfolio is a concentrated US equity portfolio comprised of S&P 500 companies that Strategas believes to have strong balance sheets based on their CDS spreads. The portfolio is designed to be fully invested. This group of stocks can be expected to under-perform in a strong bull market.

Why Blue Chip Opportunities

  • Provides a domestic equity solution that complements RiverFront’s broader global balanced solutions.
  • Premise of the strategy is to invest in companies that are perceived to be of high quality. These types of companies not only enjoy lower borrowing costs, but we would expect to be beneficiaries of an investor-led ‘flight to quality’ during crises.
  • The high-quality nature of the portfolio might provide a lower risk alternative for those who want to put money to work but are cautious about doing so.
  • Serves as a potential diversifier from passive index portfolio.

About Strategas Asset Management

Founded in 2014, Strategas Asset Management is a macro thematic investment manager. SAM leverages “top- down” research and quantitative security selection to offer a suite of thematic and tactical investment strategies. SAM, which operates independently, is wholly owned by Baird Financial Corporation and as a result, is an affiliate of RiverFront Investment Group. Jason Trennert is the lead portfolio manager for the model on which the portfolio is based.

Strategas is not a sub-adviser to the RiverFront Strategas Blue Chip Opportunities portfolio. Rather, the model is provided to RiverFront under the terms of a Model Provider Agreement. Riverfront is solely responsible for the implementation of the model on behalf of the RSBCO portfolio.

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