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Quotient Investors is recognized for its unique intra-industry investment approach. Quotient targets superior risk-adjusted returns across multiple U.S. products. Using a disciplined approach to build its proprietary intra-industry model, Quotient incorporates value, growth, momentum, and custom valuation models to identify the price drivers that are unique to each industry.

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Quotient is committed to delivering innovative research, a disciplined investment process, sophisticated algorithmic trading, strong information ratios, together with personalized client service.  Quotient, an SEC registered investment advisor, was founded in 2007 and is a majority employee-owned firm.

Quotient Investors, a new emerging manager, is the first manager selected by Strategic Investment Group for the CalPERS Manager Development Program II. Quotient's experienced investment team comes from a major global institutional management firm with track records dating back to 2000. Quotient has demonstrated expertise in alpha generation, risk control, algorithmic trading and customized client service.




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Market Overview
Second Quarter 2010

The positive performance of the first quarter reversed as the markets fell substantially in the second quarter. For 2Q 2010, the S&P 500 fell -11.4% and the Russell 2000 was down -9.9%. Meanwhile, volatility as measured by the VIX index spiked up from below 20% at the beginning of the quarter to 35% at the end.

The positive market run since the beginning of the year came to an end in May with news of a “flash crash” that greatly increased market volatility. Concerns about the health of some European economies and slowing growth in the US further weakened confidence in the market. The Federal Reserve kept interest rates unchanged also citing concerns about growth. Meanwhile, companies and investors alike are hoarding cash waiting for a clearer economic picture.

Deep Value and Relative Value themes were strong this quarter as investors sought out companies with good cash flow and earnings. Dividend yield was a particularly strong factor this quarter.

Growth and Momentum themes, instead, were flat or negative as trends were reversed. The analyst earnings growth factor was very negative as investors looked at company fundamentals rather than growth expectation for guidance.