Investment Strategies
Equity Income Portfolio (Institutional)
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Equity Income Fact Sheet

Equity Income Portfolio (Institutional)

Managers

Richard Sherry, CFA Portfolio Manager and Senior Research Analyst
    Introduction
    Highlights
    Top Five Holdings
    Sector Diversification
    Portfolio Characteristics
    Historical Returns
    Performance Statistics

The KAR Equity Income Portfolio is a U.S. large-cap portfolio of high quality, mature companies focused on providing a high level of current income while minimizing risk and preserving capital. It is a high-conviction strategy that utilizes a bottom-up fundamental research approach to identify what we believe are the best companies at the most attractive prices within the high-quality universe.

Highlights

Asset Class: Dividend Income
Primary Index: Russell 1000 Value Index*

Inception Date: May 1, 2020
Holdings Range: 25-50

Sector Constraint: Seek broad diversification, but no sector constraints
Portfolio Turnover: 25% – 45%

*The benchmark for the portfolio changed to the Russell 1000 Value Index on January 1, 2025. Prior to January 1, 2025, the benchmark was the MSCI U.S. High Dividend Yield Index. This change has been applied retroactively and occurred due to the strategy’s reduced emphasis on yield and to bring the strategy in line with industry peers.

Top Five Holdings

As of March 31, 2025

This report is based on the assumptions and analysis made and believed to be reasonable by Advisor. However, no assurance can be given that Advisor’s opinions or expectations will be correct. This report is intended for informational purposes only and should be not considered a recommendation or solicitation to purchase securities. Holdings are subject to change. Holdings and weightings are based on a representative portfolio. Individual Investors’ holdings may differ slightly. Data is obtained by FactSet Research Systems and is assumed to be reliable. Numbers may not always add up due to rounding. Past performance is no guarantee of future results.

Company

Percent of equity (%)
Zurich Insurance Group 5.2
Fortis 5.1
AbbVie 4.7
PNC Financial Services Group 4.3
Southern Company 3.9
Total 23.2

Sector Diversification

As of March 31, 2025
KAR Equity Income
Russell 1000® Value Index

Holdings are subject to change. Holdings and weightings are based on a representative portfolio. Individual Investors’ holdings may differ slightly. The sector information represented above is based on GICS sector classifications. Data is obtained by FactSet Research Systems and is assumed to be reliable.

Portfolio Characteristics

As of March 31, 2025

*Free cash flow data is as of [prior quarter end date]. Prices are as of [quarter end date]. Excludes financials.

KAR utilizes the interquartile method when calculating Debt/EBITDA. The interquartile method excludes outliers from an aggregate statistic such as weighted average. The interquartile method does not assume that data from the top or bottom of the distribution are outliers—only the extreme ends are excluded—and that it can be applied consistently as a quantitative method for most fundamental characteristics. Debt/EBITDA utilizes net debt for the calculation.

This material is deemed supplemental and complements the performance and disclosure at the end of the Disclosure page of the KAR Equity Income fact sheet. Data is obtained from FactSet Research Systems and BNY Mellon and is assumed to be reliable. Other principal consultant firms may use different algorithms to calculate selected statistics. Estimates are based on certain assumptions and historical information. Past performance is no guarantee of future results. Returns could be reduced, or losses incurred, due to currency fluctuations.
Concept

KAR
Equity
Income

Russell 1000®
Value Index
Quality
Return on Equity-Past 5 Years 25.3% 16.4%
Debt/EBITDA 1.9x 2.0x
Earnings Variability—Past 10 Years 29.7% 55.7%
Growth
Earnings Per Share Growth-Past 5 Years 7.8% 11.3%
Earnings Per Share Growth—Past 10 Years 8.1% 8.6%
Dividend Per Share Growth-Past 5 Years 7.4% 7.3%
Dividend Per Share Growth—Past 10 Years 9.3% 7.8%
Capital Generation—{ROE x (1-Payout)} 8.2% 9.5%
Value
P/E Ratio—Trailing 12 Months 23.1x 22.6x
Dividend Yield 3.0% 2.1%
Free Cash Flow Yield* 3.8% 4.2%
Market Characteristics
Dividend Payout Ratio-5 Year Average 67.7% 41.9%
$ Weighted Average Market Cap $235.2 B $191.0 B
Largest Market Cap $2,790.0 B $1,148.5 B

Historical Returns (Institutional)

*May 1, 2020

†All periods less than one year are total returns and are not annualized. Returns are final.

‡Net of all fees and expenses. Assumes a 0.70% annual fee. Fees presented on the Disclosure page of the KAR Equity Income fact sheet could vary from the assumed fee in the net-of-fee calculation, as actual fees paid by a particular client account differ depending on a variety of factors including, but not limited to, business unit and size of mandate. The fee used on the Disclosure page of the KAR Equity Income fact sheet utilizes an assumed maximum fee across the firm’s business units, which is further detailed on that page.

§Performance calculations are for the eight months ended December 31, 2020.

This material is deemed supplemental and complements the performance and disclosure on the Disclosure page of the KAR Equity Income fact sheet. Returns of the Kayne Anderson Rudnick composite are final. For further details on the composite, please see the Disclosure page of the KAR Equity Income fact sheet. Data is obtained from FactSet Research Systems and is assumed to be reliable. Past performance is no guarantee of future results. Returns could be reduced, or losses incurred, due to currency fluctuations.
Period KAR Equity Income
(gross)		 KAR Equity Income
(net)‡		 Russell 1000®
Value Index
Annualized Returns (%)† As of March 31, 2025
1st Quarter3.01 2.83 2.14
1 Year8.31 7.56 7.18
3 Year4.72 3.99 6.64
Inception*10.53 9.76 13.95
Annual Returns (%)
202410.57 9.81 14.37
20232.36 1.65 11.46
2022(1.40)(2.09)(7.54)
202118.49 17.68 25.16
2020§20.10 19.56 26.12

Performance Statistics (Institutional)

Inception*  to March 31, 2025

*May 1, 2020

This material is deemed supplemental and complements the performance and disclosure on the Disclosure page of the KAR Equity Income fact sheet. Returns of the Kayne Anderson Rudnick composite are final. For further details on the composite, please see the Disclosure page of the KAR Equity Income fact sheet. Past performance is no guarantee of future results. Returns could be reduced, or losses incurred, due to currency fluctuations.
Concept

KAR
Equity
Income (gross)

KAR
Equity
Income (net)

Russell 1000®
Value Index
Annualized Standard Deviation 12.98 12.98 15.79
Alpha (0.78) (1.47) 0.00
Beta 0.77 0.77 1.00
Sharpe Ratio 0.60 0.54 0.71
R-Squared 87.12 87.12 100.00