Institutional Investor All American Research Team

TING 74/research & rankings THE FUTURIST THE CHARTIST CONTENTS INSIDE II M errill Lynch in 2003 as a U.S. derivatives analyst. Two years later he moved to Bear, Stearns & Co. as that firm’s global head of derivatives research; PMorgan Chase J & Co. acquired Bear Stearns Cos. in 2008. — C.K. counter yclicals such as health c care, utilities and telecom tend to “lag in a world where economic data is improving.” — C.K. low correlations to other equities, he says. — C.K. WASHINGTON RESEARCH TECHNICAL ANALYSIS QUANTITATIVE RESEARCH Yin Luo Deutsche Bank Securities PORTFOLIO STRATEGY François Trahan Wolfe Trahan & Co. The buy side says: “He has the ability to identify trends early — even if they’re out of consensus.” R ejoining the first team after a year in second place is François Trahan; the Wolfe Trahan & Co. strategist also ranks third in Quantitative Research. “He looks at signals that most others ignore,” according to one client. Signs prompt Trahan, 43, to declare himself “very bullish, because there’s a tremendous amount of stimulus in the system in the U.S., coming in the form of lower inflation. Often people don’t appreciate the role that inflation plays in the business cycle.”With the federal funds rate effectively at zero, “inflation matters more than it ever has,” he adds. rahan predicts T that the tandard & Poor’s 500 S index, which rose 11.8 percent year-to-date through August, will continue to climb, especially as data points — initial jobless claims, regional purchasing managers index reports and the like — improve. Sectors most likely to benefit include financials and technology, he says, whereas The buy side says: “He is easily the best source on the Street in this area.” C redited by one buy-sider for his “unique ability to generate a significant quantity of research of an exceptionally high quality,” Yin Luo of Deutsche Bank Securities repeats in first place. Luo, 37, believes that macroeconomic factors will “continue to play a significant role in investing for the foreseeable future.” He is urging clients to incorporate macro views into their stock- selection processes with strategies like variance risk premium, which measures the difference between market-mplied risk i and realized risk.When the former is much higher than the latter, he explains, the market is in a panic mode and assets are overly depressed. This, he contends, is “a good entry point” to buy equities, highbeta stocks and cyclical sectors. Luo also suggests employing a relatively safer strategy that turns traditional finance theory on its head by betting that low- beta stocks are more likely to generate higher returns than high-beta stocks. Money managers would do well to build portfolios with lower-beta, less- olatile stocks that have v Jeffrey deGraaf Renaissance Macro Research The buy side says: “Jeff is the only technical analyst I use.” I n the pole position for an eighth year in a row is Jeffrey deGraaf of Renaissance Macro Research. “Generally speaking, I think we’re going to be plagued by a range-bound market — any momentum that develops tends to be policy- induced, and the effects don’t tend to be long-asting,” says l deGraaf, 44. “Frankly, that makes it pretty challenging.” He is alerting investors to the styles and attributes that are working in this environment. “You certainly have some momentum in various sectors, and so we’re trying to identify those as quickly as possible,” he explains. He likes health care, as a lot of names emerge from “what appear to be decadelong base formations and seem to be the new secular trend” — for example, companies that provide pharmacy benefit management services and have a retail distribution network. “This area stands out to us as being relatively resilient and seems to be capturing the early attention of Wall Street investors.” One buy-side enthusiast notes that “Jeff has a way of bringing technical research out of the oodoo-ish mumbo jumbo v and into the real world.” — C.K. Andrew Laperriere & team ISI Group The buy side says: “I know I can count on them for unbiased opinions.” I SI Group logs a tenth straight appearance atop the roster. Led for a second year by Andrew Laperriere, 44, the Washington- ased analysts “are b incredibly comprehensive in what they cover,” asserts one ally. “They look at all sides of the issues.” One subject the four- ember team has been m following closely is the upcoming U.S. presidential election and its likely impact on the domestic economy. “President Obama’s weak, but not terrible, job- pproval rating strongly a suggests the race could go either way,” aperriere says. “But L [Republican challenger Mitt] Romney has a slight edge because of the sluggish economy and the unpopularity of the president’s legislative accomplishments,” such as health care reform.The researchers predict that Republicans will retain a majority in the House of epresentatives and may preR vail in the Senate. In the meantime, “Congress is unlikely to address the fiscal cliff before the election, and it’s a close call whether a short-term deal can be cobbled together before year’s end,” he believes. Wall Street would cheer such a compromise, however, “as it would substantially reduce the risk of a fiscal atastrophe.” c — P .S. O C T O B E R 2 012 • I N S T I T U T I O N A L I N V E S T O R . C O M

Institutional Investor All American Research Team | Page 17