CBIS Announces Change in CUIT Growth Fund Manager

In early April, CBIS will replace Sands Capital Management with Los Angeles Capital Management as co-manager of the CUIT Growth Fund. The decision to make this change was based on the cumulative underperformance and excessively high return volatility in the Sands portfolio. Because Los Angeles Capital has demonstrated the ability to be a cost-effective trader and because the current Sands portfolio holdings are quite liquid, the new manager will handle the portfolio transition directly.
 
CBIS has been frustrated by the magnitude of the Growth Fund's underperformance in 2006 and 2008 as well as the volatility in the Fund. One of our goals has been to reduce tracking error versus the Russell 1000 Growth Index benchmark without sacrificing future return potential. We believe that the addition of Los Angeles Capital will help the Fund accomplish this goal.
 
We believe that Los Angeles Capital's tactical approach, with greater diversification, is more effective, particularly given today's uncertain, highly volatile market conditions. We also believe that Los Angeles Capital's quantitative style should serve as a good complement to Wellington's more fundamental approach. A more complete description of Los Angeles Capital's investment process is included below.
 
If you have any questions about this change, please contact your CBIS Investment Advisor.
 

 
Los Angeles Capital Management was founded in 2002 by four principals with extensive backgrounds in quantitative research and portfolio management. The firm is independently owned by its employees, and manages about $4 billion in equity assets quantitatively against a variety of indices. Approximately $400 million is managed in large-cap growth portfolios.
 
The firm’s investment process is based on its “Investor Preference Theory”, which reflects dynamic changes in investor risk assessment and their impact on equity prices. The process develops return predictions for a universe of 3,200 stocks based on more than 45 quantitative factors. Portfolios are optimized to maximize risk-adjusted added-value relative to the Russell 1000 Growth Index, with controlled industry and individual issue weights. Principled Purchasing restrictions are applied prior to optimization.
 
Given the evolution of financial markets, an important strength of Los Angeles Capital is the depth of its ongoing research into the factors that influence stock performance. The portfolio is quite diversified, holding from 180 to 250 stocks, with turnover of approximately 60% annually. The portfolio is generally restructured twice monthly, and trading is rigorously managed to control execution costs.

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