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Frequently Asked Questions (FAQs)
This section presents answers to frequently asked questions about
NCM Capital. If you have additional questions or need further
information, please contact Andrea Johnson.
Our FAQs are divided into the following sections. Please click
on a section title to go directly to that section, or simply scroll
this page to see all the FAQs.
Identity, Ownership and
Growth Strategy
Research Sources
Risk Management
Trades and Allocations
Client Service
Performance Reporting
Compensation Structure
IDENTITY, OWNERSHIP AND GROWTH STRATEGY
What is NCM Capital's competitive edge?
Recognizing that no single factor can ensure investment success,
NCM Capital delivers the best of many worlds to our clients. We
implement one coherent investment philosophy across multiple investment
disciplines, providing a solid framework for portfolio construction.
We integrate diverse perspectives — quantitative and fundamental,
equity and fixed income, growth and value — to strengthen
every investment decision. And we secure total client satisfaction
by emphasizing exceptional service.
What is NCM Capital's ownership status?
NCM Capital is privately held and 100% minority owned. Private
ownership affords the freedom to pursue long-term goals without
pressure from Wall Street to deliver short-term results. Private
ownership also enables us to provide an exceptionally effective
compensation program.
What is NCM Capital's growth strategy?
NCM Capital is committed to controlled growth and high standards
of service quality. We expect to increase assets under management
by approximately $6 billion over the next three years accompanied
by two to three additions to our investment staff.
RESEARCH SOURCES
What is the ratio of internal to external research?
Seventy percent of NCM Capital's research is conducted internally
by portfolio managers who maintain direct annual contact with
more than 300 companies. Thirty percent comes from external sources
both on and off Wall Street. A rigorous combination of fundamental
and quantitative research is critical to NCM Capital's ability
to deliver long-term performance for our clients.
What is the balance between fundamental and
quantitative research?
Fundamental, bottom-up analysis represents 60% of NCM Capital's
investment process. The initial application of quantitative screens
— capitalization, quality, sector-specific and style-specific
— to the relevant universe represents 40% of our analysis.
RISK MANAGEMENT
How does NCM Capital define and control risk
in equity portfolios?
We define benchmark risk as the measurable possibility of losing
value or not gaining value when investing in a style similar to
a particular benchmark. Risk is measured in terms of S&P ratings
and beta characteristics relative to the relevant index. Portfolios
are structured to minimize risk: We maintain a sector weight relative
to the benchmark that will not exceed twice the benchmark or less
than half the sector weight. With individual stock names, we maintain
weights of less than 5% or 10%, depending on the discipline.
TRADES AND ALLOCATIONS
What are NCM Capital's trading capabilities?
NCM Capital's trading system was developed and customized for
our use in conjunction with Unapen, a highly regarded software
company specializing in trading and financial systems. Our "Trade
Opt" system allows traders to create and execute orders on
a timely basis and keeps portfolio managers up-to-date with real-time
equity and cash positions. Trade Opt also supports compliance
monitoring as well as NCM Capital's ability to minimize trading
costs and improve executions on behalf of our clients.
What role does cash play in portfolio allocations?
NCM Capital maintains a policy of full investment for all equity
disciplines, reflecting our belief that long-term equity prices
will be positive and that little value can be added by market
timing. Cash averages between 1% and 3% of portfolios and will
never exceed 5%.
How are purchases and sales apportioned among
accounts?
The Trade Opt system helps NCM Capital control allocations. In
general, if more than 10% of the order is executed, shares are
prorated across all client portfolios. If less than 10% of the
order is executed, accounts with positions of 0.2% or less receive
first allocations, at the discretion of the trader and portfolio
manager. Priority is given to accounts with special mandates,
accounts that are under- or overweighted in the security and accounts
with lower or higher cash positions.
CLIENT SERVICE
How does client service work at NCM Capital?
When it comes to client service, we seek to surprise on the upside.
NCM Capital has a dedicated client service team separate from
our marketing organization. Each client has three points of contact:
a client service representative, who has overall responsibility
for the account, an operations account specialist and a portfolio
manager. We also frequently assist our clients in professional
and philanthropic endeavors such as educational seminars, community
outreach programs and internships.
How frequently do portfolio managers meet with
clients?
NCM Capital portfolio managers are accessible to clients and
responsive to their requests. In-person performance reviews are
held at least once a year, and our professionals often meet more
frequently with clients to provide interim performance reviews,
reports on developments at NCM Capital and fiduciary educational
forums.
What kinds of reports does NCM Capital provide
to clients?
A monthly Summary of Transactions Report shows trade date, quantity,
security, description, trade price, cost, sales proceeds (where
applicable) and realized gain (loss)/ capital adjustment (where
applicable). A quarterly performance report shows portfolio return
versus the benchmark, best-performing sectors, worst-performing
sectors, portfolio characteristics, major purchases and major
sales.
PERFORMANCE REPORTING
What industry standards does NCM Capital apply
when reporting performance?
NCM Capital prepares and presents performance data in compliance
with the Global Performance Standards( GIPS®). Performance
verifications are performed by an independent third-party verifier
at least annually.
COMPENSATION STRUCTURE
How are NCM Capital's professionals compensated?
In addition to competitive base salaries, investment professionals
are eligible for incentive compensation. This includes an annual
bonus based on profitability of the firm. Compensation
for client service and marketing professionals is based in part
on client retention.
What kinds of non-financial incentives does
NCM Capital offer?
NCM Capital's culture is characterized by intellectual freedom,
balanced by a team-oriented decision-making process. We actively
promote from within, mentoring and rewarding talented and self-motivated
individuals. We are committed to ongoing professional development,
reimbursing the costs associated with the acquisition of professional
designations such as Chartered Financial Analyst (CFA) and Certified
Market Technician (CMT). Our staff also enjoys a high quality
of life in the Research Triangle, where numerous educational institutions
and corporations provide a rich cultural environment.
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