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Strategies

OakBrook's "Different Way of Thinking" is reflected in the investment strategies we offer. Our three principals believe that high quality, independent research leads to superior investment results. Sound economic theory forms the basis for OakBrook's original, and highly respected, investment research.

Our research leads to investment strategies that are as compelling as they are different from more conventional approaches. For example, our Select Equity strategy focuses on companies that possess a trait economists refer to as "Market Power". OakBrook's family of Quantitative strategies makes use of "Auction Theory" for stock selection. This economics-based perspective has also led to exciting new insights into styles of investment management. By applying proprietary research, we have built an innovative family of Style Indices that offer a highly efficient means of gaining exposure to a variety of investment styles. Our Small Cap strategy utilizes these style indices to identify stocks likely to underperform in the long run and eliminate them from client portfolios in a style neutral fashion.

Quantitative Management

Our Quantitative strategies bring together the best aspects of both passive and active management. Any active management style will go through periods of substantial over and under performance relative to a benchmark, while passive management merely seeks to replicate benchmark performance. These strategies combine the best of each to add value over and above index year after year.

OakBrook’s quantitative, stock based approach is distinctive, repeatable and can enhance the performance of virtually any index. Dispensing with the common tactics of factor analysis and optimization, it bases its success on two components: a two-factor stock selection model with a firm underpinning in economic theory and a unique set of risk controls. OakBrook's Quantitative strategies can be targeted to expected annual excess returns ranging from 0.50% to 2% gross of fees with information ratios near 1. Several large and mid capitalization US benchmarks are offered including S&P 500, Russell 1000, Russell 1000 Growth and Value, and Russell Mid Cap 800.

Portfolio Managers

  • Peter Jankovskis, PhD, CFA
  • Janna Sampson, CFA
  • Giri Cherukuri, CFA

Benefits

  • Reduce risk of underperforming
  • Greater consistency of excess return
  • Lower fees than pure active management
  • Further reduction of portfolio risk: excess return typically has low correlation with that of other active equity managers

Performance

Most Recent Quarterly Product Profile

List and Description of OakBrook Investments' Composites

Disclosures

Market Neutral

OakBrook offers a long/short Market Neutral Strategy that employs the same quantitative stock selection model as used in OakBrook’s family of enhanced index strategies. The model is applied to a universe of 250 domestic large cap stocks. A rigorous portfolio construction process is then implemented to create a portfolio that is dollar neutral, style neutral and volatility neutral.

The portfolio’s value added is a function of the return spread between the long and short positions. The goal of Market Neutral is to outperform 3-month T-Bills by 3%-6% over time, after fees, with return volatility comparable to bonds. The returns of the strategy are expected to have little or no correlation with those of other asset classes.

Portfolio Managers

  • Peter Jankovskis, PhD, CFA
  • Janna Sampson, CFA
  • Giri Cherukuri, CFA

Benefits

  • Attractive absolute returns
  • Low volatility
  • Limited downside risk
  • Low correlation with returns of other asset classes

Performance

Please contact OakBrook Investments directly for additional information on Market Neutral.

Disclosures

Small Cap

OakBrook's Small Cap Strategy utilizes a proprietary style classification system to identify a group of overpriced small cap stocks and exclude them from client portfolios in a style neutral fashion. Benchmark relative gains from excluding the overpriced stocks are augmented by decisions to overweight or underweight stocks on the basis of return momentum.

The strategy is expected to outperform the S&P 600 Index by an average of 4% to 6% per year gross of fees with an information ratio greater than 0.5.

Portfolio Managers

  • Peter Jankovskis, PhD, CFA
  • Janna Sampson, CFA
  • Giri Cherukuri, CFA

Benefits

  • Well-diversified portfolio typically holding 125 to 165 stocks
  • Lower fees than pure active management

Disclosures

Select Equity

OakBrook’s Select Equity Strategy is built upon an economic concept called “Market Power”. Companies with Market Power possess both dominant market share and barrier(s) to entry. Entry barriers can take several forms including patents, brand recognition, economies of scale and several others. Companies with Market Power effectively enjoy a shield from competition, which protects market share, longer-term profitability and promotes creation of long-term shareholder value. Shares of these leading companies are purchased when OakBrook considers them undervalued by the market. The strategy’s goal is to outperform the S&P 500 by 3%-4% over the investment cycle, while not exposing investors to additional risk. Due to the conservative, defensive nature of stocks held in the portfolio, Select Equity offers its best relative performance during stable, declining or highly volatile markets, while typically lagging somewhat during rising markets.

Portfolio Managers

  • Janna Sampson, CFA
  • Peter Jankovskis, PhD, CFA
  • Giri Cherukuri, CFA

Benefits

  • Long term history of delivering high alpha
    • Attractive down market performance
    • Excellent long term performance (gross of fees)
  • Focused on long run profitability rather that short term earnings
    • Lowers portfolio turnover
    • Improves performance over the market cycle
  • Low correlation to aggressive growth, value and private equity
    • Combines best attributes of growth and value styles
    • Complements other equity strategies well
    • Provides smoothing effect to total plan performance

Performance

Most Recent Quarterly Product Profile

List and Description of OakBrook Investments' Composites

Disclosures

Style Indices

Everyone has experienced the cyclicality of growth and value managers. But why is it that not all value managers, for example, move in lockstep with one another? Through years of research we have identified another factor, a third dimension to style that is so powerful, it deserves to be a style classification in its own right.

This factor is the stability of a stock’s past returns relative to other stocks and is the basis for our Stable and Variable style groups. Both these groups offer a sharp distinction in performance. Categorizing stocks on the basis of the stability of returns represents a powerful extension of the conventional value and growth framework, enhancing the ability of our indices to distinguish growth from value stocks.

Failure to consider this factor can lead to underperformance. We have found that most equity managers are either Stable Value or Variable Growth, thereby leaving two significant style gaps – Stable Growth and Variable Value – that can be filled with our indices to improve the diversification of overall equity portfolios.

Four Improved Style Groups – Pure and Powerful

Style Indices Most of today’s leading style indices are indeed watered down, holding too many stocks that don’t capture the true characteristics of the style they are meant to represent. And when indices become diluted, they fail to demonstrate the return pattern of their style as they move through the business cycle. OakBrook’s Style Indices instead only include those stocks in each group that demonstrate the strongest characteristics. The benefit is that each of our four style indices has pure style properties.

Whether used as complements or enhancements to other styles, these indices are powerful tools. Stable Growth and Variable Value styles are under represented in most institutional portfolios and the indices can be used to gain exposure to these styles. Or, Stable Growth and Stable Value can be combined to form a Stable Equity Index, one which offers very attractive defensive properties.

Disclosures