Alger Insights that Helped Our Clients Navigate the 2020 Storm

BANNER_TITLE_INSIDE 3/4 FLYER  2/2 ALGER INS GHTS 3/4

Featured Content Capital Markets , Casting a Vote for Fundamentals – Released January 9, 2020 Market Strategy Insights , From the Crisis Emerge Change and Investment Opportunities – Released April 15, 2020 • Another cornerstone of Alger’s investment philoso- phy is our belief that innovation and disruption can generate long-term outperformance. • Specifically, we have written that innovation has triumphed over economic volatility. • During the year, the most innovative companies, as measured by the top quintile of stocks based on R&D as % of sales, have outperformed the broad stock market as measured by the S&P 1500 by approxi- mately 10% through October.”* Featured Content Market Strategy Insights , Beware the Election – Released December 20, 2020 Video , This November, Don’t Choose – Released September 25, 2020 • January, we wrote that investing in politics is a flawed strategy; innovation is more important. • We did not believe that the election would be immensely important for the stock market’s subse- quent performance. • In the month after the election, the VIX declined 43% from 37 to 21 and the S&P 500 gained 11%.

Innovative Companies Have Outperformed

CUMMULATIVE EXCESS RETURN

60% 50% 40% 30% 20% 10% 0% -10% -20% -30%

Most Innovative +4% Per Year

38%

Least Innovative -2% Per Year

Source: FactSet. Most/least innovative stock excess performance is derived from highest and lowest S&P 1500 quintiles based on R&D as % of sales, normalized for market value, using one month returns for 10 years ending 12/31/18. *Baruch Lev and Suresh Radhakrishnan, “The Stock Market Valuation of R&D Leaders.”

Election Portfolios

Most Innovative Companies

15%

CUMULATIVE RELATIVE PERFORMANCE

9%

10%

5%

0%

-6%

-5%

“America First” / Domestic Focused Companies

-10%

-15%

2016

2017

2018

2019

Source: Alger. Alger using FactSet Alpha Testing. High domestic exposure is companies in highest quintile of U.S. sales as percent of total sales in S&P 500. High R&D % of sales is highest quintile in S&P 500. Both are normalized for sector exposure.

*Normalized for market value.