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Income Equity

Quality Value oriented portfolio of 25-35 large cap equities with a secondary focus of a yield premium to its benchmark, the Russell 1000 Value.

Investment Objective

Our Income Equity strategy seeks to generate meaningful excess returns vs the benchmark at lower levels of volatility over full market cycles, utilizing a highly differentiated investment approach focused on downside protection. Secondarily, the strategy seeks to deliver a premium yield to the benchmark.

Why Invest in London Income Equity?

  • Targets high-quality, competitively advantaged US large-cap companies exhibiting the key drivers of downside protection: consistently high and improving returns on capital and strong balance sheets.
  • Invests in such companies that are trading at attractive discounts to intrinsic value as determined by our proprietary Balance Sheet Optimization valuation process that reduces forecast risk.
  • Invests in 25-35 high conviction positions with a long-term ownership mindset resulting in high active share and low turnover.
  • Aims to provide a competitive yield versus its benchmark, as well as, dividend growth that outpaces the index and rate of inflation over time.

Risk / Return Analysis

Source: eVestment, since inception 12/31/1999

Upside vs. Downside Returns

Upside Market Capture: 76.4%
Downside Market Capture: 70.5%

Source: eVestment, since inception 12/31/1999

Lower Downside Capture Leads to Excess Returns

Five-Year Annualized Rolling Returns (Net)

Since inception 12/31/1999

Hypothetical Growth of $100,000

The Growth of $100,000 chart illustrates actual net performance of a hypothetical $100,000 investment made in London’s Income Equity Strategy on its inception date, 12/31/1999. This chart assumes the reinvestment of dividends and is not intended to imply any future performance.

Annualized Returns (%)

QTDYTD1 Yr3 Yr5 Yr10 YrITD*
Income Equity (gross)5.65.610.
Income Equity (net)
Russell 1000V9.
Russell 100010.310.329.910.514.812.77.6

*Inception date 12/31/1999

Portfolio Characteristics

Income EquityRussell 1000 ValueRussell 1000
Pre-tax ROC (3 yr. avg %)24.311.314.6
Net Debt/EBITDA1.7x2.4x1.7x
Enterprise Value/EBITDA15.1x12.9x17.0x
Number of Holdings308451,004
Active Share vs Index-85.083.5
Weighted Avg Mkt Cap ($B)408.4158.6735.6
Median Mkt Cap ($B)125.313.614.5
Dividend Yield (%)

Source: FactSet, eVestment
This information relates to a representative account, therefore not every client’s account will have these exact characteristics

Return Characteristics

Income Equity (Net)Russell 1000 ValueRussell 1000
Down Market Capture (%) vs Index-70.569.1
Up Market Capture (%) vs Index-76.473.9
Cumulative Returns (%)618.1462.8485.3
Sharpe Ratio0.550.360.37
Standard Deviation12.215.615.7
Alpha vs Index-3.03.1
Beta vs Index-0.70.7

Source: eVestment, composite data since inception 12/31/1999

Performance is preliminary. Subject to change. Performance results shown should, under no circumstances, be construed as an indication of future performance. All are encouraged to read and understand the disclosure notes found on the end of the page.

The Income Equity product is typically compared to the Russell 1000 Value Index. Any comparison to the Russell 1000 is for illustrative purposes only.

All data is as of 3/31/2024 unless otherwise noted.

Top Ten Holdings (%)

HoldingIncome Equity
Berkshire Hathaway Inc. Class B4.8
Apple Inc.4.4
Lowe's Companies, Inc.4.3
Norfolk Southern Corporation4.3
BlackRock, Inc.4.3
Air Products and Chemicals, Inc.4.2
Texas Instruments, Inc.4.2
Merck & Co. Inc.4.2
Progressive Corporation4.0
Microsoft Corporation4.0

Active Share

vs Russell 1000 Value

Active share measures the percentage of holdings in the portfolio that differ from the benchmark index.

Sector Weightings (%)

Source: FactSet

Sector weightings may not add to 100% due to rounding

SectorIncome Equity
Communication Services6.2
Consumer Discretionary7.4
Consumer Staples10.2
Health Care7.8
Information Technology15.2
Real Estate2.2

Disclosure Notes

The London Company’s performances are size weighted and annualized based on calculations for the period ending March 31, 2024. The characteristics discussed herein relate to a representative account, and not every client’s account will have these exact characteristics. As London manages its client portfolios according to each client’s specific investment needs and circumstances, London cannot affirm that the characteristics of the account shown are similar to all accounts participating in the strategy. This is due in part to the timing of trades by the Advisor, market conditions, cash availability, and the timing of client deposits and withdrawals. Therefore, prospective clients should not assume that similar performance results to those shown would have been achieved for their accounts had they been invested in the strategy during the period. None of the information contained herein should be construed as an offer to buy or sell securities, or as investment recommendations.

Definition of Firm: The London Company of Virginia is a registered investment advisor. Registration does not imply a certain level of skill or training. More information about the advisor, including full descriptions of its investment strategies, fees and objectives, can be found in the firm’s Form ADV Part 2, which is available upon request by calling 804.775.0317 or visiting The London Company claims compliance with the Global Investment Performance Standards (GIPS®). GIPS® is a registered trademark of CFA Institute. CFA Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of the content contained herein. Please visit or contact us at 804.775.0317 to request a complete list and description of The London Company’s composites and/or a GIPS® Report that adheres to the (GIPS®) standards.

Composite Creation/Inception Date: December 31, 1999

Composite Definition: The Income Equity strategy invests mainly in common equities with a focus on higher overall dividend yield orientation, which may be supplemented with primarily investment grade, preferred equities. This strategy has a more conservative orientation, with a focus on capital preservation, income and growth, in order to provide greater yield and downside protection relative to our Large and Mid Cap strategies. Our Income Equity strategy is designed to generate above-average, absolute returns over full market cycles. Accounts in this product composite are fully discretionary taxable and tax-exempt portfolios with no minimum dollar amount of assets. The product is measured against the Russell 1000 Value Index and has a creation and inception date of December 31, 1999. There is no use of leverage, derivatives or short positions. All actual fee-paying discretionary portfolios are included in one or more composites that have been managed for a full calendar quarter with limited restrictions and similar objectives. As of July 1, 2022 The London Company redefined the composites to exclude all dual contract relationships and any potentially bundled fee scenarios. This policy is not retroactive, but will continue to apply going forward.

Benchmark Description: The Russell 1000 Value Index measures the performance of the large-cap value segment of the U.S. equity universe. It includes those Russell 1000 Index companies with lower price-to-book ratios and lower expected growth values. Benchmark returns are not covered by the report of independent verifiers. The Income Equity product is typically compared to the Russell 1000 Value Index. Any comparison to the Russell 1000, S&P 500, or their corresponding ETFs, is for illustrative purposes only.

Performance and Fees: Gross of fee returns are calculated gross of management and custodian fees and net of transaction costs. Net of fee returns are calculated net of actual London Company management fees and transaction costs and gross of custodian and other fees. Returns may be net of miscellaneous fund expenses. The gross figures do not reflect the deduction of investment advisory fees. Returns are calculated and stated in U.S. dollars. Prior to April 1, 2024 returns are calculated gross of withholding taxes on foreign dividends and interest. Starting April 1, 2024, performance is calculated net or gross of foreign withholding taxes on dividends and interest income dependent on custodian data. Dividends are reinvested. The accounts represented in the composite reflect actual London Company fees paid on the particular account which may be different from the fee normally offered to other clients. Policies for valuing investments, calculating performance, and preparing GIPS Reports are available upon request.

Past performance should not be taken as a guarantee of future results. The report is for informational purposes only. Data, while obtained from sources we believe to be reliable, cannot be guaranteed and all statistics are subject to change. The statements contained herein are solely based upon the opinions of The London Company and the data available at the time of publication of this report, and there is no assurance that any predicted results will actually occur. Information was obtained from third-party sources, which we believe to be reliable but are not guaranteed as to their accuracy or completeness. This report contains no recommendations to buy or sell any specific securities and should not be considered investment advice of any kind. An investment in a London Company strategy is subject to risks, including the loss of principal. Referenced strategies may not be suitable for all investors. The appropriateness of a particular strategy will depend on individual circumstances and objectives. In making an investment decision, individuals should utilize other information sources and the advice of their investment advisor.

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