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Equity
Our typical managed equity account will own a well-diversified portfolio
of individual stocks or institutional-class mutual funds, depending
on the client’s needs and portfolio size. We will typically use mutual
funds for accounts that may not be large enough to achieve adequate
diversification with individual stocks, or as a way to achieve exposure
to smaller capitalization and international stocks in individual equity
accounts. Our philosophy within individually managed equity accounts
is to own companies we feel can earn high returns on capital, are
expected to achieve above average long-term growth, and are trading
at an attractive valuation. We also believe in giving the power of
compounding time to work and therefore generally have low portfolio
turnover.
We understand that each of our clients has unique
needs and circumstances, and are flexible with our approach in order
to meet those needs. Many of our clients are sensitive to taxes. Together,
we work out a plan to minimize tax consequences while allocating the
portfolio in a fashion that meets their risk and return needs. Income
generation is a higher priority for others, in which case we’re able
to invest a portion of their portfolios in income-paying stocks. Over
the long term, dividends have made up over 40 percent of the total
return of the stock market. A typical income-oriented portfolio is
a concentrated group of above-market yielding equity and preferred
stock securities, which gives investors a higher level of income while
still offering potential for capital appreciation.
Fixed Income
Fixed income investments (bonds) are useful in portfolios to generate
income, to improve diversification, and to preserve principal. Depending
on the client’s risk tolerance, liquidity needs, portfolio size, and
tax situation, we will select from U.S. Government obligations, governmental
agencies, investment-grade corporate securities, tax-free municipal
bonds or institutional-class mutual funds.
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