Capital Markets: Observations & Insights
The Longest Expansion - Autumn 2018
Autumn 2018
Capital Markets: Observations and Insights Capital Markets: Observations and Insights The Longest Expansion
The Longest Expansion
“I always thought that record would stand until it was broken.” – Yogi Berra
Could the current U.S. expansion be record breaking? We think so. The current cycle is over nine years old. If it persists past the second quarter of 2019, it will be the longest on record, surpassing the 1990s period. While it would undoubtedly make headlines, a record-breaking U.S. expansion would not be surprising to us for several reasons. First, economic cycles are lasting longer as the economy changes structurally to being more service-oriented. Second, technological changes, such as increased automation and price transparency, are mitigating traditional inventory and inflation cycles. Lastly, the depth of the last downturn and the modest rate of subsequent expansion means that the U.S. economy took longer to reach its potential output. One thing is for sure: if this current U.S. expansion sets a new record, it will last…until it is broken. Given the trends prolonging economic cycles, we may see many more record breakers in our lifetimes.
Daniel C. Chung, CFA Chief Executive Officer Chief Investment Officer
Brad Neuman, CFA Senior Vice President Director of Market Strategy
Page 1
Key Observations
• While the U.S. economic expansion is relatively old compared to history, multiple data points suggest that growth should continue, making the current cycle the longest in U.S. history • Monetary conditions are tightening but stocks and the economy should be able to absorb moderate increases in interest rates • Business spending is accelerating and driving the broader economy, bolstered by strong earnings growth, tax reform, solid business confidence, and accommodative lending conditions
Table of Contents
The Longest Expansion
Pages 3-8
Performance
Pages 9-16
Fundamentals
Pages 17-23
Valuation
Pages 24-28
Page 2
The Upside of Being Slow The Longest Expansion
• Why has the current economic expansion lasted so long and when will it end?
‒ A big part of the answer is the depth of the recession that preceded it and the rate of the recovery thus far ‒ Economic recoveries of comparable length have had far more growth than the present one, suggesting a long runway of economic expansion now
60%
1960
50%
1990
40%
1981
30%
Long runway to catch up?
1973
20%
1969
2001
Current
10%
0%
Real Cumulative GDP Growth
-10%
0
2
4
6
8
10
12
14
16
18
20
22
24
26
28
30
32
34
36
38
40
42
Number of Quarters from Peak
Source: U.S. Bureau of Economic Analysis and Alger as of September 2018. Dates indicate beginning of measurement periods.
Page 3
Monetary Policy Is Not Restrictive The Longest Expansion
• Over the past half century, every U.S. recession has been preceded by a significantly positive real Fed Funds rate of 2% or higher
• In contrast, today we have a real Fed Funds rate of close to 0%
Real Federal Funds Rate
15%
10%
Today real short-term interest rates are far
5%
lower than what induced previous recessions
0%
-5%
-10%
1960
1962
1965
1967
1970
1972
1975
1977
1980
1982
1985
1987
1990
1992
1995
1997
2000
2002
2005
2007
2010
2012
2015
2017
Source: FactSet as of September 2018. Real Federal Funds rate is equal to the Federal Funds rate less the year-over-year change in the PCE Price Index ex-food and energy. Shaded regions denote U.S. recessions.
Page 4
Cycles Have Been Lasting Longer The Longest Expansion
• U.S. economic expansions have been increasing in duration. Driving factors include: ‒ Increased fiscal and monetary intervention ‒ Structural changes in the economy ‒ Technological advances such as improved inventory management
Age of U.S. Economic Expansions
12
10
8
6
4
Years of Expansion
2
0
1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020
Source: FactSet. Note: double-dip recession in early 1980s accounted for as one long recession.
Page 5
Take It to the Limit? The Longest Expansion
• Other countries have experienced much longer economic expansions
Expansion
‒ Including developed economies such as Australia (27+ years)
Technical Recession
Data Not Available
Source: OECD. The definition of technical recession is two consecutive quarters of negative real GDP growth – this differs from other sources such as the NBER, which determines when recessions occurred in the U.S. Data through 2Q18.
Page 6
Business Spending to Accelerate Further The Longest Expansion
• Drivers of faster growth in corporate expenditures include:
‒ Strong profit growth
‒ Tax reform—lower statutory rates, foreign profit repatriation, accelerated depreciation
‒ Higher business confidence—driven in part by lower regulation and certainty about taxes
‒ Accommodative financial conditions—banks’ willingness to lend and low credit spreads
Business Spending
15%
Robust earnings growth should help drive an acceleration in business spending
10%
5%
0%
Y-ear-over-Year Growth
-5%
1Q16
2Q16
3Q16
4Q16
1Q17
2Q17
3Q17
4Q17
1Q18
2Q18
3Q18
4Q18
1Q19
2Q19
Source: FactSet. Business spending is U.S. private fixed nonresidential investment with estimates (dotted line) based on a regression with S&P 500 EPS.
Page 7
Better to Be Behind? The Longest Expansion
• The output gap measures economic output relative to potential, with a lower output gap indicating more growth left in the cycle • While most major regions are at or near potential output, some, such as Japan and Europe, are further behind the U.S.
U.S. Output Gap
1%
4%
U.S.
Economy Above Potential
2%
0%
China
0%
Europe Japan
-1%
-2%
-4%
-2%
Economy Below Potential
(GDP / Potential GDP) - 1
-6%
-8%
1980
1982
1983
1985
1987
1989
1991
1993
1994
1996
1998
2000
2002
2004
2005
2007
2009
2011
2013
2015
2016
2018
Source: FactSet and Oxford Economics. Shaded regions indicate U.S. recessions.
Page 8
Technology-Related Companies Lead Performance
• Growth-oriented sectors, such as consumer discretionary, technology, and health care, have outperformed this year
3Q18 Returns (%)
YTD Returns (%)
U.S.
World
U.S.
World
16
25
20
12
15
8
10
4
5
0
0
-4
-5
-8
-10
Energy
Energy
Utilities
Utilities
Materials
Materials
Financials
Financials
Industrials
Industrials
Technology
Real Estate
Technology
Real Estate
Health Care
Health Care
Consumer Staples
Consumer Staples
Consumer Discretionary
Consumer Discretionary
Communication Services
Communication Services
Source: FactSet as of 9/30/18. U.S. represented by S&P 500 and World represented by MSCI AC World Index in USD.
Page 9
Value Has Lagged Performance
• Year-to-date, value factors have generally underperformed
3Q18 Excess Return (%)
YTD Excess Return (%)
1.4
3.6
1.2
2.6
1.4
0.3
0.0 0.0
0.0
0.0 -0.1
-0.2
-0.5 -0.8
-0.5
-1.3 -1.4 -1.4 -1.5
-0.7
-1.5
-3.6
Market Cap
Book / Price
EPS Growth
Market Cap
Debt / Equity
Book / Price
EPS Growth
Debt / Equity
Price Volatility
Dividend Yield
Price Volatility
Dividend Yield
Trading Activity
Earnings / Price
Revenue / Price
Trading Activity
Earnings / Price
Revenue / Price
Relative Strength
Relative Strength
Earnings Variability
Earnings Variability
Source: FactSet as of 9/30/18 using Northfield defined quantitative factors for the Northfield broad U.S. market database.
Page 10
The Earnings Growth Explosion Is Driving Performance Performance
Total Return = Dividend Yield + EPS Growth +/- P/E Change
MSCI All Country World Index ex-USA
S&P 500
Dividend
EPS Growth*
P/E Change
Dividend
EPS Growth*
P/E Change
35%
25%
30%
20%
25%
15%
20%
10%
15%
5%
10%
0%
5%
EPS Growth Explosion
-5%
0%
EPS Growth Explosion
-10%
-5%
-15%
-10%
-15%
-20%
Sep-12 Sep-13 Sep-14 Sep-15 Sep-16 Sep-17 Sep-18
Sep-12 Sep-13 Sep-14 Sep-15 Sep-16 Sep-17 Sep-18
12- Month Total Return:
12- Month Total Return:
30%
19%
20%
-1%
15%
19%
18%
14%
21%
11%
-1%
7%
20%
5%
Source: FactSet as of 9/30/18. *Based on consensus estimates of next 12-month EPS. Actual earnings per share might be materially different than shown. MSCI ACWI ex-US performance based on local currency.
Page 11
Performance
Structural Issues Driving Growth vs. Value
• Growth stocks have dramatically outperformed (+50%) Value stocks over the past decade
• The culprit for value investors has been the very weak performance of buying low P/B stocks, while low P/E strategies have fared much better • Book value, used heavily in index classification of Growth vs. Value, may no longer be as relevant given changing business models, e.g. R&D is not capitalized in book value
100 105 110
P/B, not P/E, has driven Value underperformance
60 65 70 75 80 85 90 95
P/E
P/B
Russell 1000 Value / Growth
Total Return Index
2008
2010
2012
2014
2016
2018
Source: FactSet as of 9/30/18. Price-to-earnings and price-to-book returns are based on the E/P and B/P Northfield factors for the Northfield broad U.S. market database.
Page 12
Performance
Innovative Companies Often Outperform
• Studies have shown, and our research demonstrates, that the most innovative companies grow their sales, earnings, and stock prices faster*
Innovation Drives Outperformance
600
Most Innovative +18.4% / year
500
400
300
Least Innovative +9.8% / year
200
100
-
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Source: FactSet. Most/least innovative stock 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 7/30/18. * Baruch Lev and Suresh Radhakrishnan, “The Stock Market Valuation of R&D Leaders.”
Page 13
The Great Fund Flow Rotation? Performance
• Fund flows in bonds have dramatically outperformed those into equities over the past decade—nearly $2 trillion to less than a quarter of a trillion dollars • If interest rates are rising and bond underperformance continues, equities could be due to benefit from the great fund flow rotation • Furthermore, it seems unlikely that the bull market would end without first seeing much stronger flows into stocks as has historically been the case
2.5
Bonds
Equities
2.0
1.5
When will investors turn from bonds to stocks?
1.0
0.5
0.0
-0.5
Cumulative Fund Flows ($T)
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018 YTD
Source: Morningstar. Equity fund flows represent Morningstar category of U.S. Equity mutual funds and ETFs and bond flows represent Morningstar category of Taxable Bonds mutual funds and ETFs. Data through August 2018.
Page 14
Performance
Has Active Relative Performance Troughed?
• As some of those factors reverse, active management has been doing better ‒ Interest rates rising/bond-like equities underperforming ‒ Small caps performing better ‒ Market performance more subdued
• Powerful cyclical factors impact U.S. active relative performance: ‒ Interest rates/bond-like equities ‒ Small cap performance
‒ Overall market performance ‒ Non-U.S. stock performance
% of U.S. Large Cap Active Managers Outperforming YTD
Active Relative Performance Is Cyclical
100%
57%
55%
80%
60%
24%
40%
20% % of Fund Assets Outperforming
0%
Growth
Core
Value
1970
1973
1976
1979
1982
1985
1988
1991
1994
1997
2000
2003
2006
2009
2012
2015
2018
Source: Left chart: Nomura/Instinet, Joseph Mezrich and FactSet through 9/30/18. Fund performance is trailing five-year data of U.S. active equity mutual funds in existence for five years or more and part of the growth, growth & income, and income categories based on CRSP codes. Right chart: Bank of America Merrill Lynch U.S. Equity and U.S. Quant Strategy using Lipper data relative to Russell benchmarks through 9/30/18.
Page 15
Performance
Risk Relative to Time Horizon
• Equity returns look much less volatile over a longer time period than shorter time periods
‒ Using 20-year rolling annualized returns, the minimum equity return has been higher than that of bonds while the standard deviation for equities is less than 1% higher
60
Stocks
Range of Stock and Bond Total Returns
52.3%
Bonds
50
40
29.1%
28.6%
30
19.2%
17.9%
17.0%
20
13.1%
10.0%
10
6.5%
0
2.4%
Annual Total Returns
1.3%
0.9%
-1.4%
-2.4%
-5.1%
-10
-20
-30
-40
-37.0%
1-Year
5-Year Rolling
10-Year Rolling
20-Year Rolling
Source: Morningstar. Stock data is the S&P 500 total return and bond data is the Ibbotson Associates US IT Govt total return. Data spans 1950-2017 on an annual basis.
Page 16
Global Policy Rates Are Low Fundamentals
• While many central banks such as the U.S., Canada, Mexico, and the U.K. have been raising interest rates… • Central bank policy rates around the world are still relatively low, even in real terms, where many are at or below zero including the Euro Area and Japan
= current
Central Bank Policy Rates 2007-2018
= historical range
15%
10%
Policy rates are still low
5%
0%
-5%
Source: Bank for International Settlements. Data is through July 2018.
Page 17
Fundamentals
Leading Indicators Suggest Continued Expansion
• The LEI historically leads S&P 500 EPS by 6-18 months
• Typically, changes in the Leading Economic Index (LEI) have preceded changes in economic growth • The rate of change of the LEI implies strong economic growth
• The record LEI reading in 3Q18 suggests EPS have room to run
15%
8%
$190
10%
6%
110
$170
5%
4%
GDP Growth YoY
100
$150
0%
2%
S&P 500 EPS
18 Month Lead
$130
-5%
0%
90
$110
-10%
-2%
$90
-15%
-4%
80
Leading Economic Index
-20%
-6%
$70
Leading Economic Index YoY
-25%
-8%
70
$50
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Source: FactSet, Conference Board. EPS estimates based on next 12-months consensus.
Page 18
Fundamentals
U.S. Debt Service Is Historically Low
• Despite higher levels of debt as a % of GDP, the U.S. non-financial private sector debt service ratio is much lower than in the past two recessions ‒ Because more than 80% of U.S. consumer and business debt is fixed, higher interest rates should not have a dramatic impact on service costs
U.S. Debt Service Ratio
20%
18%
Debt service ratio indicates households and corporations are not burdened by debt payments
16%
14%
12%
10%
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Source: Bank for International Settlements, September 2018. Debt Service Ratio is the share of income used for interest payments and amortizations in the non-financial private sector. Shaded regions indicate recessions.
Page 19
Fundamentals
Economic Outlook
Tailwinds
• Robust corporate profits
• Strong business and consumer confidence
• Strengthening corporate spending
• Solid U.S. consumer balance sheet
Headwinds
• Tightening monetary policy
• Trade wars
• Rising U.S. labor costs
• China growth slowdown
• Geopolitical risk
Page 20
A Powerful Trend Fundamentals
• There have been various periods in history marked by fears of “trade wars” but ultimately countries have acted rationally and reduced trade barriers • While there may be more pain to come, we believe the powerful trend toward lower tariffs and more trade will prevail • In the meantime, fiscal stimulus likely exceeds trade headwinds and active management may be able to take advantage of opportunities that arise
U.S. Tariff Rates
U.S. Gross International Trade % of GDP
8%
35%
30%
Japanese auto quotas imposed
6%
25%
20%
4%
Bush steel tariffs
15%
10%
2%
Chicken Tax / European trade dispute
5%
Time magazine cover on “Trade Wars”
0%
0%
1960
1963
1966
1969
1972
1975
1978
1981
1984
1987
1990
1993
1996
1999
2002
2005
2008
2011
2014
2017
1960
1963
1966
1969
1972
1975
1978
1981
1984
1987
1990
1993
1996
1999
2002
2005
2008
2011
2014
2017
Source: U.S. International Trade Commission, U.S. Bureau of Economic Analysis, and Alger. Tariffs are calculated as duties collected divided by total imports.
Page 21
Smaller Capitalization Stocks Poised to Outperform Fundamentals
• Stronger fundamentals : Estimated small cap EPS growth for ‘18 & ‘19 is double that of large cap
• More levered to domestic economy : Small caps are more U.S.-oriented and have less exposure to international trade friction • Rising interest rates : Small caps have historically outperformed large caps in rising rate environments • Reasonable valuation : Small cap P/E multiple premium is reasonable relative to history while a large sales multiple discount implies opportunity
Price-to-Earnings Russell 2000 / Russell 1000
Earnings Per Share
0% 10% 20% 30% 40% 50% 60% 70% 80%
R2000 R1000
180
Small caps growing faster
160
140
Median
120
EPS Indexed to 100
100
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2017
2018
2019
Source: FactSet as of September 2018. EPS for 2018-2019 are consensus estimates and actual earnings per share might be materially different than shown.
Page 22
Fundamentals
The Growth Advantage
• Three variables drive P/E multiples: growth, returns, and risk
• As compared to the Russell 1000 Value Index, the Russell 1000 Growth Index has higher expected EPS growth, higher return on equity, and lower risk in the form of better balance sheets
Stronger Growth
Higher Returns
Lower Risk
R1000G R1000V
R1000G R1000V
R1000G R1000V
27.5%
17.3%
2.6x
9.5%
12.3%
1.0x
Long-Term EPS Growth
Return on Equity
Net Debt / EBITDA
Source: FactSet as of 9/30/18. Growth represents consensus long-term analyst estimates and actual future EPS growth rates might be materially different than the forecasts shown.
Page 23
Addressing Rising Rate Concerns Valuation
• Concern: Will rising interest rates weigh on P/E multiples?
• Our take: P/Es never priced in how low interest rates had become (see gap below) so we believe earnings multiples may not suffer when rates rise
S&P 500 EPS Yield
Treasury Bond Yield
16%
Interest rates can rise without impact on stock valuations
14%
12%
10%
8%
6%
Nearly 300 bps
4%
2%
0%
1958
1962
1966
1970
1974
1978
1982
1986
1990
1994
1998
2002
2006
2010
2014
2018
Source: FactSet, Federal Reserve, and S&P, as of 9/30/18.
Page 24
Varying Premiums Valuation
• Sector valuation varies with no sector trading at a significant discount to its historical median
P/E Relative to 20-Year Median
30%
20%
13%
11%
10%
7%
6%
5%
4%
3%
2%
-1%
Energy
Utilities
S&P 500
Materials
Financials
Industrials
Information
Technology
Consumer
Health Care
Communication Services
Real Estate
Discretionary
Consumer Staples
Source: FactSet and UBS, based on S&P 500 Index as of 9/30/18. Note that the Communications Services, Consumer Discretionary, and Technology sectors’ historical data have been restated to reflect September 2018 changes to the GICS sector definitions.
Page 25
Growth and Value Near Equilibrium Valuation
• Despite their recent outperformance, Growth stocks are not very expensive compared to their Value equity counterparts relative to expected growth rates or history
Russell 1000 Growth vs. Russell 1000 Value PEG Ratio (P/E Divided by Long-Term Growth Rate)
Russell 1000 Growth Relative to Russell 1000 Value P/E
Current premium not egregious and far below tech bubble
220%
1.5x
Growth stocks are cheaper relative to long-term growth
1.2x
51%
Russell 1000 Value
Russell 1000 Growth
Median
Source: FactSet, Bank of America as of 9/30/18.
Page 26
Global Equity Multiples Reasonable Valuation
• Price-to-earnings multiples around the world are modestly higher than their historical average, which is reasonable relative to very low global interest rates
= current
Price-to-Earnings Multiple +/- 2 Standard Deviations from 15-Year Average
= +2 std dev
20x
= average
= -2 std dev
15x
EM is least expensive in
10x
absolute terms and relative to history
5x
S&P 500 MSCI AC World MSCI EAFE MSCI EM
Z-Score (Standard Deviations Above/Below Mean)
1.2
0.7
0.2
0.0
Source: FactSet. Monthly estimates over past 15 years ending 9/30/18. A Z-Score is the number of standard deviations a data point is from the mean. A z-score equal to zero, it is on the mean. If a z-score is equal to +1, it is 1 standard deviation above the mean.Standard deviation measures how much the portfolio’s return has deviated from its average historical return. If a portfolio has a high standard deviation, there have been large swings in its returns, and vice versa. Standard deviation is generally used to compare the relative risk of two portfolios or of a portfolio to a benchmark.
Page 27
Valuation Framework for Forecasting Returns
• There is a strong relationship between starting valuations and ensuing 10-year returns
• Current valuations suggest equities should materially outperform bonds over the coming decade
S&P 500 P/E vs. 10-Year Returns
Russell 1000 Growth P/E vs. 10-Year Returns
= month
= current
peak of tech bubble
25%
25%
R² = 0.79 (0.85 ex-tech bubble)
R² = 0.84
20%
20%
15%
15%
10%
10%
5%
5%
0%
0%
-5%
-5%
-10%
-10%
5
10
15
20
25
30
5
10
15
20
25
S&P 500 10-Year Annualized Return
Russell 1000G 10-Year Annualized Return
Russell 1000 Growth Price/Earnings
S&P 500 Price/Earnings
Source: FactSet. Each dot represents the P/E during that month and the returns generated over the subsequent 10 years. The starting P/E ratio is the price divided by the next 12- month earnings per share estimate at the start of each 10-year period measured. Monthly data through September 2018 and beginning in January 1986 (S&P 500) and December 1978 (Russell 1000 Growth). The tech bubble, represented by the 10-year returns beginning in April 1987-March 1990 and ending in April 1997-March 2000, skewed the regression by resulting in higher returns for given valuations than the historical relationship would imply.
Page 28
Disclosure The views expressed are the views of Fred Alger Management, Inc. as of October 2018. Alger has used sources of information which it believes to be reliable; however, this publication is not intended to be and does not constitute investment advice. These views are subject to change at any time and they do not guarantee the future performance of the markets, any security, or any funds managed by Fred Alger Management, Inc. These views should not be considered a recommendation to purchase or sell securities. Individual securities or industries/sectors mentioned, if any, should be considered in the context of an overall portfolio and therefore reference to them should not be construed as a recommendation or offer to purchase or sell securities. References to or implications regarding the performance of an individual security or group of securities are not intended as an indication of the characteristics or performance of any specific sector, industry, security, group of securities, or a portfolio and are for illustrative purposes only.
Risk Disclosures : Investing in the stock market involves gains and losses and may not be suitable for all investors. Growth stocks tend to be more volatile than other stocks as the prices of growth stocks tend to be higher in relation to their companies’ earnings and may be more sensitive to market, political and economic developments.
The S&P 500 Index is an unmanaged index generally representative of the U.S. stock market without regard to company size. The S&P Composite 1500 is an unmanaged index that covers approximately 90% of the U.S. market capitalization. The Russell 1000® Growth Index is an unmanaged index designed to measure the performance of the largest 1000 companies in the Russell 3000 Index with higher price-to-book ratios and higher forecasted growth values. The Russell 1000 Value Index measures the performance of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values. The Russell 2000 Growth Index is an unmanaged index generally representative of common stocks designed to track performance of small- capitalization companies with greater than average growth orientation. The Russell 2000 Value Index is an unmanaged index generally representative of the small-cap value segment of the U.S. equity universe and measures the performance of Russell 2000 companies with lower price-to-book ratios and lower forecasted growth values. The Russell 3000® Growth Index is an unmanaged index designed to measure the performance of those Russell 3000® Index companies with higher price-to-book ratios and higher forecasted growth values. The Russell 3000 Value Index is an unmanaged index generally representative of stocks from the Russell 3000 Index with lower price-to-book ratios and lower expected growth rates. The MSCI ACWI Index (gross) is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets. The MSCI ACWI consists of 45 country indices comprising 24 developed and 21 emerging market country indices. The MSCI ACWI ex USA Index (gross) captures large and mid cap representation across 23 of 24 Developed Markets (DM) countries excluding the US) and 23 Emerging Markets (EM) countries. The index covers approximately 85% of the global equity opportunity set outside the US. The indices presented are provided for illustrative purposes, reflect the reinvestment of dividends and do not assess fees and expenses that would have the effect of reducing returns. Investors cannot invest directly in any index. The index performance does not represent the returns of any portfolio advised by Fred Alger Management, Inc. and actual client results might differ materially than the indices shown. Note that past performance is no guarantee of future results. Comparison to a different index might have materially different results than those shown. Frank Russell Company (“Russell”) is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell ® is a trademark of Frank Russell Company. Neither Russell nor its licensors accept any liability for any errors or omissions in the Russell Indexes and / or Russell ratings or underlying data and no party may rely on any Russell Indexes and / or Russell ratings and / or underlying data contained in this communication. No further distribution of Russell Data is permitted without Russell’s express written consent. Russell does not promote, sponsor or endorse the content of this communication. ALCAPPRESSPR-1018 Fred Alger Management, Inc. • 360 Park Avenue South, New York, NY 10010 • 800.992.3863 • www.alger.com Page 29
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