One of the keys to our success is our focused investment methodology, emphasizing diversification, dividends, and tax-efficient strategies. It begins with the Core Equity Portfolio invested in market leading stocks. Because no one knows for sure which investment type is going to do well tomorrow, we spread our investments over a number of different sectors of the market, focusing on both growth- and value-oriented stocks.1
Growth stocks are publicly traded companies expected to grow at a rate higher than the market average. Value stocks are companies believed to be underpriced based on the performance of their underlying businesses and have the potential to outperform over time as their businesses expand.
Cash, or cash alternatives, are an important part of the portfolio. We aim to hold a 10% cash position at all times. Having cash in our portfolio not only allows easy liquidity for clients but also provides us with the flexibility to take advantage of investment opportunities that may arise.
Rebalancing the portfolio involves adjusting the asset allocation to keep it in line with our target allocation. Our 4.5% Rule sets a strategic target with dynamic rebalancing aimed at having no more of 5-6% of our portfolio invested in any single security. This approach limits the exposure to any one investment in hopes of reducing potential risk for clients.
Periodic rebalancing includes selling certain stocks that have grown out of balance and have moved above the target and investing in new stocks or reinvesting in positions that have fallen under 4.5%.
1 Asset allocation and diversification are investment methods used to help manage risk. They do not guarantee investment returns or eliminate risk of loss including in a declining market.