Portfolio Goal & Objective

The three objectives of the portfolios are to provide diversification, to reduce overall risk and to consistently outperform the S&P 500 Index benchmark*. These portfolios may be appropriate for moderate to aggressive investors who are seeking to keep up with inflation and add growth, income, and value to their portfolio. I believe that most investors could benefit from having a portion of their portfolio exposed to U.S. equities.

Portfolio Overview and Philosophy

The portfolios combine my insights regarding economic conditions and broader investment cycles along with analysis of individual securities by using a statistical model, integrated research and a monitoring process. This process is applied to each strategy, sector, and security within the portfolio. Understanding overall risks of each investment is the most important factor to the construction of these diversified portfolios. I believe returns cannot be managed but the risk taken to achieve results may, and the risk management is integrated throughout all aspects of the investment philosophy.

These portfolios focus on large and mid-cap equities from the S&P 500 Index. By embracing diversification in all sectors, and through active management, I attempt to reduce the risk from unpredictable markets, unforeseen events, as well as identify opportunities in uncertain markets.

Investment selections diagram.

Investment Process

Top-Down Analysis

By using a top-down analysis of the global macroeconomic environment, I am able to focus on opportunities for the future by identifying long-term market sector themes. Experience has shown that these themes provide powerful momentum to select companies which could help reduce risk. The top-down analysis and macroeconomic views help guide the portfolio selection.

Bottom-Up Analysis

The bottom-up analysis helps determine the intrinsic value of the company by using a credit overview, fundamental analysis, and a risk/reward determination. Comprehensive security research is vital to the selection process.

Market Statistical Analysis

Equally important is to consider the current market trends of each security within the investment options. I have created a statistical screening process that seeks to control risk and volatility in the portfolio. Before an investment can be included within the portfolio, the security needs to meet momentum requirements, volatility guidelines, and value trends.

Portfolio Construction

Risk management remains the principal consideration in the investment process. The portfolio guidelines are created to help ensure diversification across all sectors and themes. By considering the security's impact on the portfolio's industry and sector allocation, all equities within the portfolio should fit the overall goals of the portfolio.

The construction process considers the following: equity position size (generally not to exceed 1% per company), sector and industry weighting, and cash allocation (typically 0-5% as the portfolio generally remains fully invested).

Portfolio Monitoring

Ongoing monitoring and risk supervision includes entry and exit strategies, liquidity analysis, and tracking of portfolio characteristics. Continuous monitoring and risk management analysis helps to ensure that each security maintains appropriate risk/reward characteristics.

Portfolio monitoring portfolio infographic.

*There is no assurance that the objectives of the portfolios will be achieved. Investing involves risks including the possible loss of capital. The S&P 500 is an unmanaged index of 500 widely held stocks, and cannot be invested in directly. Asset allocation, diversification, and risk management techniques do not guarantee a profit nor protect against loss. Mid-cap securities involve additional risks and are not suitable for all investors. Companies engaged in business related to a specific sector are subject to fierce competition and their products and services may be subject to rapid obsolescence. There are additional risks associated with investing in an individual sector, including limited diversification.