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A Valuation Discipline Focused on Industries
As a multi-cap manager, ICON views the U.S. market as one asset class,
affording us the flexibility to go anywhere on the market cap and style grid in
order to find value. While the ICON system starts with the calculation of
value-to-price ratios (V/P) for individual stocks, we calculate them in order
to establish industry V/P ratios. We believe markets have themes with
industries assuming leadership for many quarters, even years. We use industry
V/P ratios to identify those themes early in the market cycle.
Our investment approach is based on the belief that it is easier to select
industries than it is to select individual stocks. By stressing industry
exposure, and by holding a selected group of stocks within an industry, we try
to reduce the random risk associated with investing in individual securities.
We use this methodology to manage all ICON portfolios.
Sectors and Industries in Today’s Economy
Listed below are the 147 industries, categorized by ICON among 9 sectors, that
make up the Standard & Poor’s and MSCI Barra Global Industry Classification Standard (GICS
®) structure.
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An investment concentrated in sectors and industries may involve greater risk and volatility than a more diversified investment and the technology sector has been among the most volatile sectors in the market. There are risks associated with small- and mid-cap investing such as less liquidity, limited product lines, and small market share.
To analyze intrinsic value, the ICON valuation methodology relies on the integrity of publicly released financial statements. ICON’s value-to-price ratio is a ratio of the intrinsic value, as calculated using ICON’s valuation methodology, of a broad range of U.S. equities within ICON’s system as compared to the current market price of those equities.
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