Why Mid-Cap?<br />First Quarter 2010<br />For presentation with audio, visit www.brainshark.com/ridgeworth/whymidcap<br />
Disclosures<br />Past performance does not guarantee future results. The performance data quoted represents past performan...
Table of Contents<br /><ul><li>A Long Record of Outperformance…………………………….
A Consistent Record of Outperformance………….................
A Better Risk/Reward Relationship........................................
Performance Over Economic Cycles………………………….
Mid-caps and the Current Market Environment……………….
Conclusion………………………………………………………...
Glossary…………………………………………………………...</li></ul>Page 4<br />Page 8<br />Page 9<br />Page 10<br />Page 13<br />Page 15<br />Page...
A Long Record of Outperformance<br />An investment in mid-caps would have rewarded investors over the long term<br /><ul><...
A $10,000 investment in mid-caps would have grown to nearly $470,000 — $175,000+ greater than either large or small caps.<...
A Long Record of Outperformance<br />Mid-caps have outperformed other cap sizes over short and long time periods <br /><ul...
The outperformance is most significant in the 5- to 15-year time periods.</li></ul>Past performance does not guarantee fut...
A Long Record of Outperformance<br />Mid-cap outperformance can be attributed to several factors <br />Mid-cap companies a...
A Consistent Record of Outperformance<br />Mid-cap stock outperformance has been consistent over time<br /><ul><li>Over ro...
In rolling 10-year periods, mid-caps outperformed small caps every single time.
Mid-caps have exhibited outperformance in both recessionary and expansionary periods. </li></ul>Past performance does not ...
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The Benefits of Mid-Cap Investing

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Presentation shows the long-term value of investing in mid-cap stocks.

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The Benefits of Mid-Cap Investing

  1. 1. Why Mid-Cap?<br />First Quarter 2010<br />For presentation with audio, visit www.brainshark.com/ridgeworth/whymidcap<br />
  2. 2. Disclosures<br />Past performance does not guarantee future results. The performance data quoted represents past performance and current returns may be lower or higher. The investment return and principal value of an investment will fluctuate thus an investor’s shares, when redeemed, may be worth more or less than their original cost. <br />Mutual fund investing involves risk, including possible loss of principal. Equity securities (stocks) are more volatile and carry more risk than other forms of investments, including investments in high grade fixed income securities. Mid capitalization funds typically carry additional risks since smaller companies generally have a higher risk of failure. <br />This paper reflects the analysis and opinions of RidgeWorth Investments as of March 2010. Because market and economic conditions are often subject to rapid change, the analysis and opinions provided may change without notice. The analysis and opinions may not be relied upon as investment advice. <br />Statements of fact are from sources considered reliable but no representation or warranty is made as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.<br />In preparing this paper, we have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from reliable sources.<br />An investor should consider the fund’s investment objectives, risks, and charges and expenses carefully before investing or sending money. This and other important information about the RidgeWorth Funds can be found in the fund’s prospectus. To obtain a prospectus, please call 1-888-784-3863 or visit www.ridgeworth.com. Please read the prospectus carefully before investing.<br />® 2010 RidgeWorth Funds. RidgeWorth Funds are distributed by RidgeWorth Distributors LLC. RidgeWorth Investments is the trade name for RidgeWorth Capital Management, Inc., the adviser to the RidgeWorth Funds, and is not affiliated with the distributor.<br />
  3. 3. Table of Contents<br /><ul><li>A Long Record of Outperformance…………………………….
  4. 4. A Consistent Record of Outperformance………….................
  5. 5. A Better Risk/Reward Relationship........................................
  6. 6. Performance Over Economic Cycles………………………….
  7. 7. Mid-caps and the Current Market Environment……………….
  8. 8. Conclusion………………………………………………………...
  9. 9. Glossary…………………………………………………………...</li></ul>Page 4<br />Page 8<br />Page 9<br />Page 10<br />Page 13<br />Page 15<br />Page 16<br />
  10. 10. A Long Record of Outperformance<br />An investment in mid-caps would have rewarded investors over the long term<br /><ul><li>Between 1979 and 2009 mid-caps significantly outpaced large and small caps.
  11. 11. A $10,000 investment in mid-caps would have grown to nearly $470,000 — $175,000+ greater than either large or small caps.</li></ul>Past performance does not guarantee future results.<br />
  12. 12. A Long Record of Outperformance<br />Mid-caps have outperformed other cap sizes over short and long time periods <br /><ul><li>In periods ranging from one to 30 years the annualized returns of mid-caps were higher than the other three market caps for the period ending 12/31/09.
  13. 13. The outperformance is most significant in the 5- to 15-year time periods.</li></ul>Past performance does not guarantee future results.<br />
  14. 14. A Long Record of Outperformance<br />Mid-cap outperformance can be attributed to several factors <br />Mid-cap companies are typically small cap <br />companies that have succeeded<br />Mid-cap companies typically have greater financial <br />liquidity and better capital-raising ability than small caps<br />Mid-cap companies typically have higher cash flows and <br />earnings acceleration compared to large cap companies<br />Mid-cap companies receive less analyst <br />coverage than large cap companies<br />
  15. 15. A Consistent Record of Outperformance<br />Mid-cap stock outperformance has been consistent over time<br /><ul><li>Over rolling time periods ranging from one- to 10-years, mid-caps have outperformed large and small caps well over half the time.
  16. 16. In rolling 10-year periods, mid-caps outperformed small caps every single time.
  17. 17. Mid-caps have exhibited outperformance in both recessionary and expansionary periods. </li></ul>Past performance does not guarantee future results.<br />
  18. 18. A Better Risk/Reward Relationship<br />Mid-caps have had a higher Sharpe Ratio than other cap sizes <br /><ul><li>Recently, mid-caps have exhibited volatility that is more consistent with small-caps.
  19. 19. Over longer time periods the standard deviation of mid-caps has been closer to large caps.
  20. 20. Higher returns than large and small caps and volatility that is aligned with large caps have provided mid-caps with a superior risk/reward profile.</li></ul>Past performance does not guarantee future results.<br />
  21. 21. A Better Risk/Reward Relationship<br />Mid-caps participated in much of the market’s upside, while avoiding much of it’s downside<br /><ul><li>Mid-caps have captured most of the market’s upswings without participating in all of the downside of small cap stocks.
  22. 22. Relative to large caps, mid-caps have often captured more than 120% of the upside while typically capturing only 100-120% of the downside.</li></ul>Past performance does not guarantee future results.<br />
  23. 23. Performance Over Economic Cycles<br />Mid-cap performance has followed a predictable pattern over full market cycles<br /><ul><li>On average, bear markets have bottomed four months prior to the official end of a recession.
  24. 24. As the market approaches the bottom, mid-caps have historically underperformed large caps.
  25. 25. But, mid-caps have accelerated faster than large caps coming out of recessions.</li></ul>Past performance does not guarantee future results.<br />
  26. 26. Performance Over Economic Cycles<br />Expected volatility has been an indicator of mid-cap performance relative to mega caps<br /><ul><li>When expected volatility spiked in the late 1990s and in 2009 mid-caps underperformed large caps.
  27. 27. In 2003, when volatility began to recede, mid-cap outperformance relative to large caps skyrocketed.</li></ul>Past performance does not guarantee future results.<br />
  28. 28. Performance Over Economic Cycles<br />The opposite relationship has generally been true when comparing mid-caps to small caps<br /><ul><li>When expected volatility rose mid-caps usually outperformed small caps.
  29. 29. Immediately following periods of high volatility, small caps outperformed mid-caps.
  30. 30. In 2008, the relationship broke down for a brief period after Lehman declared bankruptcy.</li></ul>Past performance does not guarantee future results.<br />
  31. 31. Mid-caps and the Current Market Environment<br />March 2009 signaled the transition from recession to expansion<br /><ul><li>The exact timing of the recession’s end is still unknown, however, consensus is that the transition from recession to expansion is well underway.
  32. 32. As this transition continues, a number of current and expected environmental factors bode well for mid-cap stocks and active mid-cap managers.
  33. 33. Increasing investor risk appetites
  34. 34. Recent outperformance of consumer discretionary versus consumer staples
  35. 35. Expected emphasis on quality
  36. 36. Escalating Mergers & Acquisitions activity</li></li></ul><li>Mid-caps and the Current Market Environment<br />Mid-caps may improve the risk/return relationship over the long term<br /><ul><li>Including a mid-cap allocation has historically resulted in improved portfolio performance with a minimal increase in risk.
  37. 37. The incremental benefit of adding a 40% allocation of mid-caps would have generated a 25% increase in return with only 12% more risk for the one-year period.
  38. 38. Investors’ allocations to mid-cap should be consistent with their risk tolerance</li></ul>Past performance does not guarantee future results.<br />
  39. 39. Conclusion<br /> Investors should consider an allocation to mid-caps as part of a diversified portfolio<br /><ul><li>Investors currently on the sidelines of the market will likely begin to move back into the equity markets due to an increased appetite for risk.
  40. 40. An analysis of mid-caps relative to other capitalization segments reveals the continuing strength of mid-caps as part of a diversified investment portfolio.
  41. 41. Investors who are ready to re-enter the equity markets may be well served by adding an allocation of mid-caps as part of a diversified portfolio because mid-caps have had:</li></ul>Consistent outperformance relative to large caps and small caps<br />A better risk-reward profile than other market cap sizes<br />Less extreme behavior under changing economic conditions <br />Favorable characteristics regardless of economic environment <br />
  42. 42. Glossary<br /> Index Definitions & Investment Terms<br />Russell 1000 Index<br />Measures the performance of the large cap segment of the U.S. equity universe, representing approximately 92% of the U.S. market.<br />Russell Midcap Index <br />Measures the performance of the mid-cap segment of the U.S. equity universe, representing approximately 27% of the total market capitalization of the Russell 1000 companies.<br />Russell 2000 Index <br />Measures the performance of the small cap segment of the U.S. equity universe, representing approximately 8% of the total market capitalization of that index. <br />Sharpe Ratio <br />A risk-adjusted measure that is calculated using standard deviation and excess return to determine reward per unit of risk. The higher the Sharpe Ratio, the better the fund’s historical risk-adjusted performance<br />
  43. 43. Thank You<br />

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