Global Equity Strategy:Global Best of Breed up nearly 50% since inception

Big outperformance from Global Best of Breed

    Since inception on April 5, 2010 through the end of May 2013, our Global Best ofBreed screen (“BoB”) has returned 49% and has significantly outperformed thebenchmark MSCI All Country World Index (up roughly 18% over the sameperiod). The strategy outperformed in 2012, and continues to do very well in 2013(up almost 13% through May versus 8% for ACWI). Crucially, Global BoB hascontinued to offer much better risk-adjusted returns with a Sharpe ratio nearly 2Xthat of ACWI since inception.

    The 3Q13 basket: Financials become Best of Breed

    Of the 3,400 companies in the BofA Merrill Lynch coverage universe, 17 qualifiedfor Global Best of Breed in 3Q13. This quarter’s basket provides exposure tothree of our favorite investment themes: US housing, Japan and EM wealth. Thescreen boasts a high weighting to US Financials, accounting for nearly 25% of themarket cap, and a more aggressive cyclical tilt. The US accounts for 63% of thebasket, EM makes up just under 22%, Japan 10% and Hong Kong 5%. There isno exposure to Europe, Tech or Utilities in 3Q13.

    Why Best of Breed works

    Our BoB strategy uses a strict set of criteria to identify some of the world’s highestquality companies that are positioned to take advantage of scarce global growth.

    We define Best of Breed stocks as companies that have strong earnings growth,corporate management, balance sheets and margins. As an increasing number ofcompanies have repaired their balance sheets in recent years, BoB has been ableto capture some of the world’s best companies, even in more “risky” regions andsectors, hence the ongoing outperformance.