Equity Management

At City National, equity management is an objective process that combines thorough quantitative analysis with market acumen. Together, our investment managers, support teams and Chief Investment Officer monitor the domestic and international economies, conduct valuation analyses and gauge market sentiment to arrive at an overall market outlook. The market outlook guides strategy and helps define such issues as:

• Company size (Large Cap/Small Cap) weighting
• The inclination toward growth versus value stock strategy
• The most attractive investment sectors

A key advantage of City National's equity management approach is our sector analysis and weighting.

Following extensive review of current business trends and forecasts, our research analysts identify the industrial sectors that are likely to perform most positively in the coming months. Attractive sectors are given more weight in a client's portfolio and weaker sectors are de-emphasized. As part of this process, we continually test our choices against changing market conditions.

Our stock selection process is another competitive advantage.

We have a precise selection process that tracks a large and diverse field of equity stocks. In evaluating these stocks, we combine select research from Wall Street with our combined assessment of valuation, earnings growth, price and risk potential. This highly objective process, aided by our own proprietary computer analysis program, provides comparative rankings of companies within each key industry sector and the market at large.

Investment managers apply to this ranking a qualitative analysis to gauge each company's position in the marketplace. This final evaluation includes a review of:

• Industry and competitive trends
• Legal and environmental landscapes
• Management changes
• Perceived risk levels

City National clients also benefit from our diversification strategy.

We believe that, in general, an equity portfolio should include 50 or more stocks to achieve adequate diversity and to compensate for what recent studies have determined are significant increases in individual stock volatility over the past 10 years. Holding more companies in a client's portfolio captures the breadth of the market by increasing exposure to more industries and diversification within any given industry. In this way, return is generally enhanced while risk is minimized.

Our sell discipline is applied to enhance return, but not at the expense of risk.

We are vigilant about monitoring the performance of all stocks within a City National client portfolio. One single factor may not in itself be a cause to sell a stock. More likely it is a combination of factors that contribute to the decreased attractiveness of a security - factors such as:

• A stock no longer supports the portfolio's strategic objectives.
• A security has peaked and could be replaced by another in the category.
• A change in management or company structure impedes growth.

Getting Started

To learn more, please contact us or visit us at one of our Private Client Services locations.