Montag & Caldwell Strategies Commentaries Private Client Group People About Contact Us M&C Celebrates A 75 Year History Search for: Large Cap Growth Overview Vehicles Performance Calendar Year Returns Rolling 10 Year Other Performance Risk Portfolio Detail Back to Top Overview The Investment Policy Group (“IPG”), comprised of all portfolio managers and research analysts, is the catalyst in our decision-making process. Portfolio policy and stock selection are reviewed at IPG meetings held at least twice weekly. Specific decisions regarding purchases and sales, as well as the percent of the portfolio any security is to represent, are based on consensus resulting from these meetings and are implemented across all large cap growth accounts unless there are specific client restrictions. In fully discretionary accounts with no client restrictions, the portfolio managers have no discretion to enact trades that are not approved by the IPG. As the markets do not operate in a vacuum, the IPG also meets twice a month to discuss macroeconomic issues. In these meetings, the IPG makes short-term economic forecasts and systematically reviews long-term economic, social, political and demographic trends having important influences on the financial markets and the companies that we follow. Sector and industry group allocation may be confirmed by this top-down thinking. Large Cap Growth Montag & Caldwell’s growth equity philosophy emphasizes fundamental valuation techniques which focus on a company’s future earnings and dividend growth rates. The process is primarily bottom up and utilizes a present valuation model in which the current price of the stock is related to the risk adjusted present value of the company’s estimated future earnings stream. The Firm seeks to buy growth stocks selling at a discount to fair value and at a time when superior earnings per share growth is visible for the intermediate term. Philosophy and Process At Montag & Caldwell, we believe that good investment returns are derived from the competent, disciplined, fundamental analysis of individual securities, performed by experienced professionals operating as a team. We are long-term investors focusing on high quality growth opportunities. Our process is primarily bottom-up in which we inter-relate valuation with earnings momentum. We offer a concentrated portfolio of 30-40 issues actively managed by a team comprised of both portfolio managers and analysts. The team is the catalyst in our decision-making. While we recognize the need to diversify a portfolio’s securities and sectors in order to reduce its risk, we believe that, in order to add value, it is also important to have some sector concentration in the portfolio. We are willing to totally exclude a sector from our portfolios if we do not see sufficiently accelerating earnings and/or appropriate valuations. Our growth equity philosophy utilizes a valuation technique which focus’ on a company’s future earnings and dividend growth rates. The process utilizes a present valuation model in which the current price of the stock is related to the risk adjusted present value of the company’s estimated future earnings stream. The identification of appropriate stocks for consideration for our large cap growth product begins with screening a universe of publicly traded U.S. securities for market capitalization of at least $3 billion (although we generally require at least $5 billion market capitalization for investment consideration and typically purchase those with an $8-10 billion or greater market capitalization), an expected 10% earnings growth rate, and a proprietary quality evaluation. The judgment based on qualitative factors and strong financial characteristics further narrow the universe to a select list of approximately 150 names. A holding will be reviewed for sale when it reaches our target price, which is normally 120% of the estimated fair value. A significant earnings disappointment will trigger an immediate review of the holding and a decision will be made to buy additional shares or reduce or eliminate the position. Download Fact Sheet Sector Weights September 30, 2021 Portfolio sector weights are of the Montag & Caldwell Large Cap Growth Representative Account. Please see the disclosures presentation at the bottom of this page for important information that is pertinent to this chart. Source: FactSet Recent Publications Vehicles Separate Accounts The Montag & Caldwell Large Cap Growth separately managed accounts were established in 1945 and the primary focus historically has been on the institutional separate account market, almost exclusively with our flagship large cap growth strategy. We have focused principally on larger clients in the corporate, endowment, foundation, public and Taft-Hartley markets. Our primary means of distribution has been through fee-based consultants or through our direct marketing efforts. M&C is also a large cap growth manager in a number of manager-of-manager programs and participates in various Wrap/SMA and UMA programs. Performance M&C’s high quality growth investment strategy enables its portfolios to participate fully in those market conditions that favor growth-oriented investment styles that are based upon earnings growth, not pure momentum regardless of valuation or earnings levels. Typically, these are periods of low to moderate economic growth and low or declining interest rates. In stable economic environments, the long-term consistent growth- rate of the Firm’s type of companies is in favor with most investors, and helps to drive the higher valuations of these companies relative to more cyclically oriented companies. In low interest rate environments, investors are willing to pay more for high-quality and consistent earnings streams. One of the hallmarks of M&C’s large cap growth investment process is that it does not often stay out of favor for long periods. The Firm’s attention to the valuations of the growth companies it buys allows it to find good opportunities even when the growth style of investing may be out of favor. Our investment process also tends to experience less downside risk relative to peer processes, and it would not be unusual for our product to outperform in a down market. Our use of a stock-specific, risk-adjusted discount rate, which is a unique component of our valuation work, combined with our use of conservative growth assumptions in our quantitative valuation process have contributed to reducing risk in our portfolios while allowing us to maximize upside potential. Our stock-specific, risk-adjusted discount rate is determined by our proprietary financial scoring process which rewards high quality companies, and also advantages companies with historically predictable earnings. The most difficult environment for M&C’s approach is one of speculative excess driven purely by price momentum and disconnected from fundamentals. Quarterly Returns Composite performance is annualized for periods greater than 1 year. Returns as of September 30, 2021. Source: Portfolio Accounting System. Please see the disclosures presentation at the bottom of this page for important information that is pertinent to this table. 3Q21 YTD 1 Year 3 Years 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 35 Years Large Cap Growth Composite Gross of Fees -1.61 8.58 21.13 19.50 18.87 16.12 11.80 9.57 9.87 11.54 12.32 Large Cap Growth Composite Net of Fees -1.70 8.25 20.65 19.01 18.40 15.67 11.38 9.15 9.45 11.13 11.90 Russell 1000 Growth 1.16 14.30 27.32 21.98 22.83 19.66 13.32 11.03 10.11 10.87 11.57 S&P 500 0.58 15.92 30.00 15.98 16.89 16.63 10.36 9.50 9.64 10.55 11.14 Monthly Returns Composite performance is annualized for periods greater than 1 year. Returns as of October 31, 2021. Source: Portfolio Accounting System. Please see the disclosures presentation at the bottom of this page for important information that is pertinent to this table. 10/31/2021 1 Year 3 Years 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 35 Years Large Cap Growth Composite Gross of Fees 5.81 32.07 24.78 20.60 15.78 11.96 9.75 10.03 NA NA Large Cap Growth Composite Net of Fees 5.78 31.55 24.28 20.12 15.33 11.54 9.34 9.62 NA NA Russell 1000 Growth 8.66 43.21 29.38 25.48 19.41 13.69 11.20 10.45 --- --- S&P 500 7.01 42.91 21.46 18.92 16.21 10.62 9.77 9.82 --- --- Calendar Year Returns Understanding our style through relative performance is important, and is easily shown on a calendar year basis. As we discussed above, our clients do well in growth-oriented markets driven by earnings, rather than momentum regardless of valuation. Our clients also tend to do better in down markets, often as a result of a growth at any price environment coming to an end, resulting in volatility as the market re-prices risk commensurate with valuation. Please see the disclosures presentation at the bottom of this page for important information that is pertinent to this table. Source: Portfolio Accounting System. Show 5 10 25 50 100 entries Percent Return Per Period Year Gross of Fee Net of Fee Russell 1000 Growth S&P 500 2020 34.06 33.51 38.49 18.40 2019 34.00 33.48 36.4 31.48 2018 -0.58 -0.98 -1.51 -4.39 2017 24.75 24.27 30.22 21.84 PreviousNext Rolling 10 Year Returns In our Large Cap Growth Composite’s 30+ year history, we have accumulated 111 rolling ten year periods and the blue area represents periods of outperformance, while the gold area represents periods of underperformance. The chart reflects a normal distribution of the rolling 10-year annualized excess returns from the M&C Large Cap Growth Composite. Performance is presented net of fees. Please see the disclosures presentation at the bottom of this page for important information that is pertinent to this illustration. Returns as of June 30, 2021. Source: Portfolio Accounting System, Russell. Risk Our use of a stock-specific, risk-adjusted discount rate, which is unique, and conservative growth assumptions in our quantitative valuation process have contributed to reducing risk in our portfolios while allowing us to maximize upside potential. Please see the disclosures presentation at the bottom of this page for important information that is pertinent to these illustrations. Data as of June 30, 2021. Source: National Consulting Firm Rolling Five Year Standard Deviation Down Market Capture Chart Portfolio Detail As of September 30, 2021. Portfolio characteristics and top ten holding are of the Montag & Caldwell Large Cap Growth Representative Account. Please see the disclosures presentation at the bottom of this page for important information that is pertinent to these tables. Characteristics Source: FactSet Number of Holdings 35 Weighted Average Mkt. Cap $565,753MM Price to Earnings - Trailing 31.9 Price to Earnings (NTM) 23.87 Estimated 3-5 Year EPS Growth 19.05% Active Share 68.43% Top Ten Holdings Source: Portfolio Accounting System. References to specific portfolio securities are not intended as recommendations of those securities and carry no implications about past or future performance. Information about all recommendations made within the past year is available upon request. Alphabet Inc. 6.7% Microsoft Corp. 5.6% Facebook, Inc. 5.3% Amazon.com, Inc. 4.9% Apple Inc. 3.9% Lowe's Companies 3.8% Qualcomm Inc 3.8% UnitedHealth Group 3.7% Visa Inc. Class A 3.5% Ross Stores 3.5% DISCLOSURES PRESENTATION Strategies Commentaries Private Client Group People About Contact Us M&C Celebrates A 75 Year History Search for: Phone (404) 836-7100marketingwebcontact@montag.com 3455 Peachtree Road, NESuite 1500Atlanta, Georgia 30326-4202