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“We believe that a consistently applied, disciplined investment process that utilizes three independent and largely uncorrelated sources of alpha can provide strong returns over time.”

— Peter Santoro, Senior Portfolio Manager

Investment Approach

The Columbia Focused Large Cap Equity portfolio seeks to outperform the S&P 500 Index and peer strategies, and rank solidly in the top quartile over a full market cycle. Our actively managed investment process leverages Columbia Management’s resources and considers two key elements: stock selection and portfolio construction. This active and fluid process gives us the flexibility to invest in companies in which we have strong conviction, provides the opportunity to outperform the broad market in many environments and is designed to deliver strong, risk-adjusted performance.

Distinguishing Features

  • Composite alpha created from the three independent research sources at Columbia Management allows for multiple perspectives and limits the individual attachment and a “following the herd” mentality
  • Risk budgeting in the portfolio construction process allows the team to be risk aware, rather than risk averse. This more accurate assessment of risk has led to consistent risk-adjusted returns and a strong information ratio for the strategy
  • Disciplined, research-driven process that is generally sector neutral to the benchmark has led to reduced portfolio volatility

Investment Process

Define and evaluate investable universe

Prioritize candidates for further research

  • Universe is the Russell 1000 Index, S&P 500 Index, existing holdings and international companies (both ADRs and local)
  • Analysis incorporates multiple factors, emphasizing improving revenue and earnings trends, high or rising returns on capital, sound or improving balance sheets and strong cash generation potential
Conduct research and valuation analysis

Identify approximately 200 companies for further research

  • Incorporate analysis from the following groups into the stock selection process: Large Cap Core team, fundamental and quantitative research teams
  • Evaluate companies based on rigorous bottom-up research and also sector-specific drivers of excess return
Construct portfolio and manage risk

Diversified portfolio of approximately 45–65 holdings where team maximizes potential alpha by continually challenging existing and potential holdings

  • Portfolio generally sector neutral to the S&P 500
  • Portfolio construction process yields an optimal combination of stocks within risk parameters
  • 2%–4% tracking error umbrella