ST R AT E G Y S N A P S H OT / OV E R V I E W
Strategy Snapshot
4th Quarter as of December 31, 2016
Who We Are
Fred Alger Management, Inc. is widely recognized as a pioneer of growth-­style
invest­ment management. We have been an indepen­­dent, privately owned firm since
our inception in 1964. For more than 50 years, we have had three leaders with one
vision: Maintaining the legacy and continuity of the Alger Investment Philosophy.
We strive to deliver consistently superior investment results for our clients.
Invest­ment management is our only business. We believe our independence
enables us to remain true to our investment beliefs.
Why Alger?
• Since 1964, an independent company
• Proprietary, bottom-up fundamental research
• Vibrant, research-intensive culture
• Proven, repeatable, and consistent in­vest­ment process
• Dedicated to helping our clients achieve their investment goals
Investment Philosophy
We believe that companies undergoing Positive
Dynamic Change offer investors the best long-term
growth potential. We find Positive Dynamic Change in:
• Companies experiencing High Unit Volume Growth—
These companies are experi­encing a growing
demand, have a strong business model, and enjoy
market dom­inance.
• Companies undergoing Positive Life Cycle Change—
New management, product inno­vation, or a new
acquisition are all hall­marks of positive life cycle
change. They may also bene­fit from new regulations.
We believe in extensive, original, and fundamental
research.
Our People and Process
Analysts are the foundation of our investment process.
They are:
•S
ector specialists and industry experts who are
responsible for companies through­­­­out all market caps.
•P
assionate, disciplined, and creative indivi­duals,
constantly seeking a “differ­entiated view."
• In continuous communication with port­­folio managers,
uncovering, generating, and recom­mending new
ideas, and moni­toring portfolio stock performance.
Investment
Portfolio Managers
Experience (Yrs)
Daniel Chung, CFA
22
Patrick Kelly, CFA
19
Gregory Adams, CFA
29
Ankur Crawford, Ph.D.
12
Pedro Marcal
27
Deborah Vélez Medenica, CFA
20
Amy Zhang, CFA
19
Client Portfolio Managers
Kevin Collins, CFA
William Rechter, CFA
Investment
Experience (Yrs)
24
45
Research Team
Number of People
Senior Analysts
6
Analysts14
Associate Analysts
7
Research Associates
11
STRAT EGY SN A PSH OT 2/4
A Focus on Clients
Fred Alger Management, Inc. provides investment management services to
institutional clients, such as mutual funds, corporations, public plans, religious
organi­zations, Taft Hartley plans, socially responsible investors, foundations and
endowments. We strive to deliver consistently superior investment results for
our clients. Invest­ment manage­ment is our only business. We believe our
independence enables us to remain true to our investment beliefs.
Key Facts
• Founded. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1964
• Number of Employees. . . . . . . . . . . . . . . . . . . . . . . 163
• Number of Investment Professionals. . . . . . . . . . . 53
• Assets under Management. . . . . . . . . . . . $19.5 billion
• Total Institutional Assets. . . . . . . . . . . . . $9.6 billion*
Fred Alger Management, Inc. Asset Distribution
Offshore
Intermediary**
Firm-wide Assets ($ millions)
(51%)
Large Cap
Spectra. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,076
Capital Appreciation. . . . . . . . . . . . . . . . . . . . . . . . 11,033
Capital Appreciation Focus. . . . . . . . . . . . . . . . . . . . . 438
Capital Appreciation SRI. . . . . . . . . . . . . . . . . . . . . . . 47
Large Cap Growth . . . . . . . . . . . . . . . . . . . . . . . . . . 779
Growth & Income . . . . . . . . . . . . . . . . . . . . . . . . . . . 141
Mid Cap
Mid Cap Growth . . . . . . . . . . . . . . . . . . . . . . . . . . . 407
SMid Cap Growth. . . . . . . . . . . . . . . . . . . . . . . . . . . 176
Mid Cap Focus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Small Cap
Small Cap Growth . . . . . . . . . . . . . . . . . . . . . . . . . . 507
Small Cap Focus. . . . . . . . . . . . . . . . . . . . . . . . . . . 250
International
Emerging Markets. . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Global Growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
* Institutional includes separate accounts and
institutional mutual funds.
** Intermediary includes Alger mutual funds and
Separately Managed Accounts (SMA).
Institutional Separate Accounts Assets
by Client Type
Foundation
Endowment
(7%)
International Growth . . . . . . . . . . . . . . . . . . . . . . . . . 170
Socially
Responsible
(1%)
Dynamic Opportunities. . . . . . . . . . . . . . . . . . . . . . . 135
Public
(20%)
Balanced . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Responsible Investing. . . . . . . . . . . . . . . . . . . . . . . . . 65
Health Sciences . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Sub-Advisory
(35%)
Alternatives
Specialty†
†
Institutional*
(49%)
Taft-Hartley
(21%)
Not all share classes are available in certain products
Corporate
(16%)
3-Year Statisticsa (as of 12/31/16)
Capital Appreciation
Russell 1000
Growth
Alpha
0.59
Capture Ratio
0.86
Upside Capture (%)
100.49
Downside Capture (%)
104.76
Excess Return (%)
-0.63
Information Ratio
-0.20
Sharpe Ratio
0.64
0.50
Batting Average
Spectra
Russell 3000
Growth
-0.64
0.87
101.99
106.33
-0.63
-0.18
0.63
0.50
Mid Cap Growth
Russell Mid Cap
Growth
-2.61
0.78
98.32
112.74
-2.56
-0.62
0.26
0.58
SMid Cap Growth Small Cap Growth Emerging Markets International Growth
Russell 2500
Russell 2000
MSCI Emerging
MSCI ACWI
Growth
Growth
Markets
ex USA
-2.08
-2.87
0.08
0.05
0.85
0.83
0.91
0.89
88.53
87.61
80.98
83.60
101.02
101.44
89.11
89.33
-2.33
-2.89
0.34
0.21
-0.73
-0.93
0.07
0.04
0.20
0.13
-0.13
-0.10
0.42
0.33
0.58
0.50
Risk Disclosures: Prices of growth stocks tend to be higher in relation to their companies’ earnings and may be more sensitive to market, political, and economic developments
than other stocks, making them more volatile. The returns of growth-style investments tend to vary more widely over time than those of value-style investments. Investing in the
stock market involves gains and losses and may not be suitable for all investors.
FOR INSTITUTIONAL USE ONLY
Composite Snapshot
As of March 31, 2011
STRAT EGY SN A PSH OT 3/4
Alger Strategy Performance (%) (as of 12/31/16)
4Q16b
YTDb
1 Year
3 Year
5 Year
10 Year
Since
Inception
All/Large Cap
Capital Appreciation (Incepted 1/1/76)
Gross of Fees
-1.69
1.64
1.64
7.64
15.15
10.15
14.99
Net of Fees
-1.86
0.95
0.95
6.91
14.39
9.35
14.30
Russell 1000 Growth
1.01
7.08
7.08
8.55
14.50
8.33
—
eVestment % Rank (Large Cap Growth Equity Universe)c
79
75
75
40
22
4
—
Capital Appreciation Focus (Incepted 1/1/13)
Gross of Fees
-1.02%
2.85%
2.85%
8.04%
—
—
14.75%
Net of Fees
-1.14%
2.44%
2.44%
7.67%
—
—
14.32%
Russell 1000 Growth
1.01%
7.08%
7.08%
8.55%
—
—
14.30%
68
67
67
30
—
—
eVestment % Rank (Large Cap Growth Equity Universe)c
—
Spectra (Incepted 10/1/08)
Gross of Fees
-1.81%
1.07%
1.07%
7.64%
15.55%
—
14.88%
Net of Fees
-2.01%
0.26%
0.26%
6.78%
14.60%
—
13.91%
1.20%
7.39%
7.39%
8.27%
14.44%
—
11.65%
72
68
68
23
—
—
Russell 3000 Growth
eVestment % Rank (All Cap Growth Equity Universe)c
15
Mid Cap Growth (Incepted 7/1/93)
Gross of Fees
Net of Fees
Mid Cap
Russell MidCap Growth
eVestment % Rank (Mid Cap Growth Equity Universe)c
-0.11%
2.16%
2.16%
3.67%
12.48%
5.75%
10.88%
-0.30%
1.40%
1.40%
2.87%
11.60%
4.93%
10.00%
0.46%
7.33%
7.33%
6.23%
13.51%
7.83%
9.38%
64
84
84
75
58
92
—
SMid Cap Growth (Incepted 6/1/02)
Gross of Fees
-2.32%
5.13%
5.13%
3.12%
11.14%
7.20%
9.46%
Net of Fees
-2.53%
4.26%
4.26%
2.26%
10.23%
6.36%
8.58%
Russell 2500 Growth
2.60%
9.73%
9.73%
5.45%
13.88%
8.24%
9.13%
94
75
75
69
82
74
—
Gross of Fees
-2.18%
9.56%
9.56%
—
—
—
2.78%
Net of Fees
-2.36%
8.77%
8.77%
—
—
—
2.03%
3.57%
11.32%
11.32%
—
—
—
1.68%
95
59
59
—
—
—
—
eVestment % Rank (Small-Mid Cap Growth Equity Universe)c
Small Cap
Small Cap Focus (Incepted 4/1/15)
Russell 2000 Growth
eVestment % Rank (Small Cap Growth Equity Universe)c
Small Cap Growth (Incepted 1/1/87)
Gross of Fees
1.90%
7.72%
7.72%
2.16%
10.45%
6.77%
10.26%
Net of Fees
1.70%
6.85%
6.85%
1.31%
9.54%
5.90%
9.38%
Russell 2000 Growth
3.57%
11.32%
11.32%
5.05%
13.74%
7.76%
7.81%
62
70
70
78
93
81
—
eVestment % Rank (Small Cap Growth Equity Universe)c
International
Emerging Markets (Incepted 1/1/11)
Gross of Fees
-6.48%
4.13%
4.13%
-1.85%
4.17%
—
-0.87%
Net of Fees
-6.71%
3.07%
3.07%
-2.93%
3.02%
—
-1.96%
MSCI Emerging Markets
-4.08%
11.60%
11.60%
-2.19%
1.64%
—
-1.96%
74
87
60
32
—
—
Gross of Fees
-2.76%
-4.05%
-4.05%
-1.12%
6.67%
—
5.59%
Net of Fees
-2.93%
-4.75%
-4.75%
-1.82%
6.04%
—
5.06%
MSCI ACWI ex USA
-1.20%
5.01%
5.01%
-1.32%
5.48%
—
3.81%
49
95
95
55
58
—
—
eVestment % Rank (Emerging Mkts All Cap Equity Universe)c
International Growth (Incepted 10/1/09)
eVestment % Rank (MSCI ACWI ex-US Large Cap Equity Universe)c
Alternatives
87
Dynamic Opportunities (Incepted 6/1/08)
—
Gross of Fees
0.43%
1.47%
1.47%
3.56%
8.39%
—
7.66%
Net of Fees
0.11%
0.19%
0.19%
2.29%
7.09%
—
6.44%
S&P 500
3.82%
11.96%
11.96%
8.87%
14.66%
48
63
63
45
eVestment % Rank (Fundamental Long-Short Equity Universe)c
FOR INSTITUTIONAL USE ONLY
50
7.94%
—
—
STRAT EGY SN A PSH OT 4 /4
a
The information shown is for a representative account and is subject to change. Actual
client account holdings and sector allocations may vary. Statistics represent a comparison
of the Portfolio to each index shown above. Certain information is sourced from FactSet.
Alpha is a risk-adjusted performance measure that represents the average return on a
portfolio over and above that predicted by the capital asset pricing model, given the portfolio’s beta and the average market return. Upside Capture Ratio measures a manager’s
performance in up markets relative to a particular benchmark. Downside Capture Ratio
measures a manager’s performance in down markets relative to a particular benchmark.
Capture Ratio is calculated by dividing Upside Capture by Downside Capture. Excess
Return is the portfolios return that exceeds that of its benchmark. Information Ratio (IR)
measures a portfolio manager’s ability to generate excess returns relative to a benchmark,
but also attempts to identify the manager’s consistency. Sharpe Ratio measures how
well the manager generated returns for the level of risk taken, and is calculated as the
difference between the portfolio’s rate of return less the 3 month T-Bill’s rate of return
relative to the difference between the portfolio’s standard deviation less the 3 month
T-Bill’s standard deviation for the period shown. Note that using a different proxy for the
risk-free rate of return might have materially different results. Batting Average measures
the portfolio’s frequency of success. A batting average of 50% means that the portfolio
has outperformed its benchmark in half of the periods measured. A high batting average
shows that a fund has consistently outperformed its benchmark but it does not show by
how much or how little.
b Not Annualized
c For the 4Q16, YTD, 1-, 3-, 5-,and 10-year period ending 12/31/16, respectively, the
percentile ranks were calculated in the All Cap Growth Equity Universe among 103, 103,
103, 100, 95, and 79 managers: Large Cap Growth Equity Universe among 321, 321, 321,
317, 301, and 263 managers: Mid Cap Growth Equity Universe among 118, 118, 118, 114,
109, and 93 managers; Small-Mid Cap Growth Equity Universe among 83, 83, 83, 74, 68,
and 56 managers; Small Cap Growth Equity Universe among 187, 187, 187, 178, 168, and
142 managers; Emerging Mkts All Cap Equity Universe among 242, 242, 242, 222, and 180
managers: MSCI ACWI ex-US Large Cap Growth Equity Universe among 123, 123, 123, 115,
and 102 managers; Fundamental LongShort Equity Universe among 590, 570, 570, 492,
and 417 managers. Note that eVestment’s rankings may use a performance calculation
methodology that differs from Fred Alger Management, Inc.’s. (”Alger”). Differences in
the methodologies may lead to variances in calculating total performance returns, which
might affect the ranking of Alger’s strategies. eVestment collects information directly
from investment management firms and other sources believed to be reliable; however,
eVestment does not guarantee or warrant the accuracy, timeliness, or completeness of the
information provided and is not responsible for any errors or omissions. Please note that
for any reporting period, some investment management firms in a particular eVestment
category might not have provided their results, which might affect the rankings or comparison of Alger performance to eVestment data. The rankings are displayed for informational purposes only and should not be relied upon when making investment decisions.
1.Fred Alger Management, Inc. is a New York-based investment adviser that has been in the
business of providing investment advice since 1964.
2.The strategies are comprised of: Spectra: Primarily invests in growth equity securities of
U.S. companies identified through our fundamental research as demonstrating promising
growth potential, and engages in short selling (up to approximately 10% of the market
value of the portfolio). Capital Appreciation: Primarily invests in growth equity securities of
U.S. large cap companies identified through our fundamental research as demonstrating
promising growth potential. Capital Appreciation Focus: Primarily invests in a focused
portfolio of approximately 50 growth equity securities of U.S. large cap companies identified through our fundamental research as demonstrating promising growth potential.
Mid Cap Growth: Primarily invests in growth equity securities of U.S. mid cap companies
identified through our fundamental research as demonstrating promising growth
potential. Small Cap Focus: Primarily invests in a focused portfolio of generally 50 or fewer
growth equity securities of U.S. small cap companies identified through our fundamental
research as demonstrating promising growth potential. Small Cap Growth: Primarily
invests in growth equity securities of U.S. small cap companies identified through our
fundamental research as demonstrating promising growth potential. SMid Cap Growth:
Primarily invests in growth equity securities of U.S. small and mid cap companies identified through our fundamental research as demonstrating promising growth potential.
Emerging Markets: Primarily invests in growth equity securities of companies of all market
caps, domiciled in emerging market countries, and identified through our fundamental
research as demonstrating promising growth potential. International Growth: Primarily
invests in growth equity securities of large cap companies domiciled outside the U.S. identified through our fundamental research as demonstrating promising growth potential.
Dynamic Opportunities: Hedged equity strategy seeking long term capital appreciation,
downside protection, and lower volatility by primarily investing in long and short positions
in equity securities of U.S. companies.
3.All returns assume reinvestment of dividends and are gross of withholding taxes where
applicable. Performance for periods less than one year is not annualized.
4.Gross of fees performance is shown prior to the deduction of management fees and after
the deduction of trading expenses. Net of fees performance reflects the deduction of
actual management fees and trading expenses. Additional information regarding the policies for valuing portfolios, calculating performance and preparing compliant presentations
are available upon request.
5.Fred Alger Management, Inc.’s standard fee offered to separately managed clients is as
follows: Spectra: .74% on the first $50 million of assets under management; .64% on the
next $50 million of assets under management; .54% on the next $150 million of assets
under management; and .44% on assets over $250 million. Capital Appreciation: .65%
on the first $50 million of assets under management; .55% on the next $50 million of
assets under management; .45% on the next $150 million of assets under management;
and .35% on assets over $250 million. Capital Appreciation Focus: .65% on the first
$50 million of assets under management; .55% on the next $50 million of assets under
management; .45% on the next $150 million of assets under management; and .35%
on assets over $250 million. Mid Cap Growth: .75% on the first $25 million of assets
under management; .65% on the next $25 million of assets under management; .60%
on the next $50 million of assets under management; .55% on the next $100 million of
assets under management; .50% on the next $250 million of assets under management;
.45% over $500 million. SMid Cap Growth: .90% on the first $25 million of assets under
management; .80% on the next $25 million of assets under management; .70% on the
next $50 million of assets under management; .60% over $100 million. Small Cap Focus:
.90% on the first $25 million of assets under management; .85% on the next $25 million
of assets under management; .75% on the next $50 million of assets under management;
.65% on the next $150 million of assets under management; .60% over $250 million.
Small Cap Growth: 0.85% on the first $25 million of assets under management; .80% on
the next $25 million of assets under management; .70% on the next $50 million of assets
under management; 0.60% on the next $150 million of assets under management; .50%
over $250 million. Dynamic Opportunities : 1.0% on total assets. Growth & Income : .55%
on the first $25 million of assets under management; .50% on the next $25 million of
assets under management; .45% on the next $50 million of assets under management;
.375% on the next $150 million of assets under management; and .30% on assets over
$250 million. Emerging Markets: .90% on the first $25 million of assets under management; .85% on the next $25 million of assets under management; .80% on the next $50
million of assets under management; .75% over $100 million. International Growth: .75%
on the first $25 million of assets under management; .70% on the next $25 million of
assets under management; .65% on the next $50 million of assets under management;
.55% on the next $150 million of assets under management; .45% over $250 million.
Actual fees may differ.
6.The Russell 3000® Growth Index is an index of common stocks designed to track
performance of companies with greater than average growth orientation in general. The
Russell 1000® Growth Index is an index of common stocks designed to track performance
of large-capitalization companies with greater than average growth orientation.The Russell
Midcap® Growth Index is an index of common stocks designed to track performance of
medium-capitalization companies with greater than average growth orientation. The Russell 1000® Index measures the performance of the large-cap segment of the U.S. equity
universe. The Russell 2500® Growth Index is an unmanaged index designed to measure
the performance of the 2,500 smallest companies in the Russell 3000® Index with higher
price-to-book ratios and higher forecasted growth values. The Russell 2000® Growth
Index is an index of common stocks designed to track performance of small-capitalization companies with greater than average growth orientation. The Russell 3000 Index
measures the performance of the 3000 largest U.S. companies based on the total market
capitalization, which represents 99% of the U.S. equity market. The S&P 500 Index is an
index of large company stocks considered representative of the U.S. stock market. The
Morgan Stanley Capital International (MSCI) Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance
in the global emerging markets. The MSCI ACWI ex USA Index captures large and mid cap
representation across 23 of 24 Developed Markets (DM) countries (excluding the US) and
23 Emerging Markets (EM) countries. The index covers approximately 85% of the global
equity opportunity set outside the US. Investors cannot invest directly in any index. Index
performance does not reflect deductions for fees, expenses or taxes.
Frank Russell Company is the source and owner of the Russell Index data contained or reflected in this material and all trademarks and copyrights related thereto. This is a presentation
of Fred Alger Management, Inc. The presentation may contain confidential information and
unauthorized use, disclosure, copying, dissemination or redistribution is strictly prohibited.
Frank Russell Company is not responsible for the formatting or configuration of this material
or for any inaccuracy in Fred Alger Management, Inc.’s presentation thereof.
Any views and opinions expressed herein are not meant to provide investment advice and
there is no guarantee that they will come to pass.
FOR INSTITUTIONAL USE ONLY
Fred Alger Management, Inc. 360 Park Avenue South, New York, NY 10010 / 800.223.3810 / www.alger.com
01.12.17
CS4Q2016