Not An Offer or Inducement
Nuance Investments, LLC’s (Nuance or the Company) presentation book has been prepared for informational purposes only and does not constitute an offer or solicitation to sell shares or securities in the Company or any related or associated company. Any such offer or solicitation will be made only by means of the Company's offer of discretionary investment management services under written contract. None of the information or analyses presented are intended to form the basis for any investment decision, and no specific recommendations are intended. Accordingly this book does not constitute investment advice or counsel or solicitation for investment in any security. This book does not constitute or form part of, and should not be construed as, any offer for sale or subscription of, or any invitation to offer to buy or subscribe for, any securities, nor should it or any part of it form the basis of, or be relied on in any connection with, any contract or commitment whatsoever. The Company expressly disclaims any and all responsibility for any direct or consequential loss or damage of any kind whatsoever arising directly or indirectly from: (i) the use of this presentation book, (ii) reliance on any information contained herein, (iii) any error, omission or inaccuracy in any such information or (iv) any action resulting therefrom.
Investment Performance
Investors should seek financial advice regarding the appropriateness of investing in any securities or investment strategies discussed or recommended in this documentation and should understand that statements regarding future prospects may not be realized. Investors should note that income from such securities may fluctuate and that each security's price or value may rise or fall. Accordingly, investors may receive back less than originally invested.
No Warranties
Nuance takes care to ensure that the information provided is accurate and up to date. However this documentation is provided without warranties of any kind, either expressed or implied, including but not limited to warranties of title or implied warranties of merchantability or fitness for a particular purpose. Opinions expressed herein are subject to change without notice. All information and content in this book is furnished "as is," without warranty of any kind, express or implied, including but not limited to implied warranties of merchantability, fitness for a particular purpose, or non-infringement. The Company will not assume any liability for any loss or damage kind, arising, whether direct or indirect, caused by the use of any part of the information provided.
Copyright
You may not copy, reproduce, recompile, decompile, disassemble, reverse engineer, distribute, publish, display, perform, modify, upload to, create derivative works from, transmit or in any way exploit any part of this material, except that you may use for your own personal, noncommercial use. The analysis and presentation included in this material may not be re-circulated, redistributed or published without our prior written consent. Modification of the materials content would be a violation of our copyright and other proprietary rights. Additionally, you may not offer any part of this material for sale or distribute it over any other medium including but not limited to over-the-air television or radio broadcast, a computer network or hyperlink framing on the internet without our prior written consent. The information contained herein may not be used to construct a database of any kind. Nor may the information be stored (in its entirety or in any part) in databases for access by you or any third party or to distribute any database services containing all or part of the information without our prior written consent.
GIPS COMPLIANCE DISCLOSURES
Compliance Statement
Nuance claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS® standards. Nuance has been independently verified for the periods 11/03/08 – 03/31/11 by Absolute Performance Verification. The verification reports are available upon request. Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm’s policies and procedures are designed to calculate and present performance in compliance with the GIPS standards. Verification does not ensure the accuracy of any specific composite presentation. Nuance is an investment adviser registered with the Securities and Exchange Commission. The firm maintains a complete list and description of composites, which is available upon request. Results are based on fully discretionary separate accounts under management, including those accounts no longer with the firm. The U.S. Dollar is the currency used to express performance returns and assets. Performance results are presented both net and gross of management fees and include the reinvestment of income. Actual returns will be reduced by actual investment advisory fees and other expenses that may be incurred in the management of the account. From the inception of each composite until 12/31/10, Time Weighted Return was compounded on a monthly basis. Beginning 01/01/11 through present, Time Weighted Return was compounded on a daily basis.
Definition of the Firm
The definition of the firm is the foundation for firm-wide compliance and creates defined boundaries for determining the assets of the firm. In this instance, the firm is defined as Nuance Investments, LLC (Nuance), a majority owned subsidiary of Montage Investments, LLC (“Montage”). Montage is a wholly owned subsidiary of Mariner Holdings, LLC. Nuance founded on November 1, 2008, was formed on the belief that the ability to outperform the broad stock market is predicated on a consistent and disciplined value investing approach. Our Investment Team's sole focus is generating investment returns for our clients by diligently reviewing one company at a time on its own investment merits. We are consistently searching for leading business franchises, with good financial strength, that are priced below our proprietary view of intrinsic value. While we are certainly not the first firm to use this approach, we believe that our uniquely consistent process provides investors with a distinctly advantaged investment product over the long term. The total firm assets will be defined as all discretionary and non-discretionary assets under management within Nuance. This includes primary investment management accounts and sub-advisory investment management accounts as well as both fee-paying and non-fee paying assets.
Nuance has two composites. The Nuance Mid Cap Value Composite and the Nuance Concentrated Value Composite. Their complete descriptions are defined below:
The Nuance Mid Cap Value Composite consists of separately managed accounts (portfolios) in the Mid Cap Value strategy. Nuance Mid Cap Value seeks to achieve long-term capital appreciation through investments in primarily high quality, though temporarily out of favor, U.S. equity securities. The market capitalization of at least 75 percent of these securities will generally fall within the range of the $1 billion - $25 billion market capitalization. The weighted average market capitalization will also be maintained between the smallest and largest members of the Russell Midcap® Index. Nuance also monitors that the Morningstar® Size Score is between 100 and 200. The Investment Management Team may invest in the securities of international companies, but these investments will not total greater than 15 percent of the total market value of the portfolio and the they can only invest in international companies deemed to be in a “developed country” as defined by Morgan Stanley and their index group. Cash will not be greater than 10 percent of the market value of the portfolio. Each security position will not be greater than 7.5 percent of the market value of the portfolio. A typical portfolio will hold between 50 and 100 securities. There is no minimum separate account asset level necessary for inclusion in the composite. For comparison purposes, the composite is measured against the Russell Midcap® Value Index as the primary index. The Russell Midcap® Value Index measures the performance of the mid-cap value segment of the U.S. equity universe. It includes those Russell Midcap® Index companies with lower price-to-book ratios and lower forecasted growth values. The Russell Midcap® Value Index is constructed to provide a comprehensive and unbiased barometer of the mid-cap value market. The Index is completely reconstituted annually to ensure larger stocks do not distort the performance and characteristics of the true mid-cap value market. Secondary indices are the S&P MidCap 400 Value Index and the S&P 500 Index. The composite was created on November 3, 2008.
The Nuance Concentrated Value Composite consists of separately managed accounts (portfolios) in the Concentrated Value strategy. Nuance Concentrated Value seeks to achieve long-term capital appreciation through investments in primarily high quality, though temporarily out of favor, U.S. equity securities. The Investment Management Team may invest in the securities of international companies, but these investments will not total greater than 25 percent of the total market value of the portfolio and they can only invest in international companies deemed to be in a “developed country” as defined by Morgan Stanley and their index group. Cash will not typically be greater than 25 percent of the market value of the portfolio. 50 percent of the portfolio assets will not have positions of greater than 5 percent. Each security position will not be greater than 15 percent of the market value of the portfolio. Each portfolio will not exceed a 25 percent weighting in one industry as defined by Global Industry Classification Standards (GICS®). A typical portfolio will hold between 15 and 35 securities. There is no minimum separate account asset level necessary for inclusion in the composite. For comparison purposes, the composite is measured against Russell 3000 Value Index as a primary index. The Russell 3000 Value Index measures the performance of the broad value segment of the U.S. equity universe. It includes those Russell 3000 companies with lower price-to-book ratios and lower forecasted growth values. The Russell 3000 Value Index is constructed to provide a comprehensive, unbiased, and stable barometer of the broad value market. The Index is completely reconstituted annually to ensure new and growing equities are included and that the represented companies continue to reflect value characteristics. Secondary index is the S&P 500 Index. The composite was created on November 13, 2008. It should be noted that the Russell Midcap® Value Index was considered the primary index until June 30, 2010. Beginning July 1, 2010 the primary index is considered the Russell 3000 Value Index. The change in index was due to further study surrounding the market for all-cap strategies and the appropriate index for these strategies.
Dispersion is calculated using an asset-weighted standard deviation methodology. Only those accounts included for the full calculation period are part of the dispersion calculation. Since Inception, Nuance has adopted the following Significant Cash Flow Policy for both composites. An account will be removed from a composite if a client has given specific instructions that prevent full investment of the cash flow(s) in a timely manner (defined as 5 business days or greater), or if a single or cumulative cash flow(s) are equal or greater than 3 percent of the total composite market value on the day the cash flow(s) is initiated, or if a single or cumulative cash flow(s) are equal or greater than 50 percent of the total account value on the day the cash flow(s) is initiated. If these circumstances exist, the account will be removed from the composite and added back to the composite on the first day of the month following the date that the account is fully invested (defined as being within ten percent of the model portfolios cash target).
Nuance does not disclose a three-year annualized standard deviation calculation for the composite and benchmarks because 36 monthly returns are not available. More information regarding Composite descriptions and composite calculations are available upon request.
Fees and Related
The full fee schedule for all Nuance products is available upon request. It should be noted that the collection of fees produces a compounding effect on the total rate of return net of management fees. Nuance Mid Cap Value charges .80% for clients with assets under $25 million, .75% for clients with assets under management between $25-50 million, .70% for clients with assets under management between $50-75 million, .65% for clients with assets under management between $75-$100 million, and .60% for clients with assets greater than $100 million. Nuance Concentrated Value charges .95% for clients with assets under $25 million, .90% for clients with assets under management between $25-50 million, .85% for clients with assets under management between $50-75 million, .80% for clients with assets under management between $75-$100 million, and .75% for clients with assets greater than $100 million. Incentive fee structures and performance-based fee structures are available for qualified clients and are negotiated individually. Nuance reserves the right to modify fee structures on an account by account basis at its discretion.
Gross of fee performance returns are presented before management fees but after all trading expenses. No other fees or expenses are deducted for gross of fee performance. Net of fee performance returns are presented after actual standard management fees, actual performance-based management fees and all trading expenses. No other fees are deducted aside from trading and management fees for the calculation of net of fee performance. Valuations are net of all applicable withholding taxes. Portfolios are valued in accordance with GIPS® Valuation Principles. More information regarding standard investment management fees and the calculation of performance-based investment management fees is available upon request.
Additional Notes and Disclosures
The use of derivatives may be employed for purposes of currency hedging and or to equitize the cash position of the portfolios. Past performance is not indicative of future results.
On 06/01/2010, the firm changed its name to Nuance Investments, LLC. Prior to 06/01/2010 the firm name was Mariner Value Strategies, LLC.
To obtain additional information about the valuation of portfolios, calculation of performance and preparation of compliant presentations please contact Katie Carver at Katie.Carver@nuanceinvestments.com or 816.743.7080.
Nuance Investments, LLC