This strategy is designed to be a core holding for clients that seek less volatility than the broader equity markets with some income and capital appreciation.
Target of 65% equity and 35% fixed income 40 -50 Equity holding. 4% max position size 90% of holding must pay a dividend. Bonds must be rated investment grade or higher at purchase.
We seek to invest in high quality businesses with defensible cashflow streams. Purchases are generally made during periods of temporary uncertainty or distress at valuation metrics below historical averages.
The bond portion of the portfolio is intended to act as a ballast for the overall portfolio. Bonds are selected based on their ability to withstand valuation pressure, even during a severe economic or financial crisis. Yield is a secondary consideration. The target bond allocation is 35% but will fluctuate between 20% and 50% depending on market conditions.
The strategy seeks to reduce volatility by investing in companies with strong credit metrics, a history of growing dividend payments and a management team that is aligned with shareholders through stock ownership and recent open market purchases. In addition, the strategy will focus on companies and industries that have historically had lower betas (a measure of volatility).
Dividends are not guaranteed and must be authorized by the company's board of directors. Diversification and asset allocation do not ensure a profit or protect against a loss. Beta compares volatility of a security with an index, such as the S&P 500. A beta of one means the security has volatility equal to that of an index. Bonds are subject to credit and interest rate risk. Timely payments of interest and principal payments are based on the financial condition of the issuer. Yield and market value will fluctuate with changes in market conditions. A credit rating of a security is not a recommendation to buy, sell or hold the security and may be subject to review, revision, suspension, reduction or withdrawal at any time by the assigning Rating Agency. Ratings and insurance do not remove market risk since they do not guarantee the market value of the bond. Every investor's situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Investing involves risk and you may incur a profit or loss regardless of strategy selected.