Our Durable Equity Strategy is designed to provide lower volatility on a stock-by-stock and portfolio basis. This is accomplished through a quantitative analysis of factors that are indicative of lower stock and business risk. Over a full cycle, we believe the strategy will provide lower volatility than the market with equivalent or better returns.
How We Make Equity Strategies Work For You:
We seek to identify companies capable of generating returns for you. We also consider secular trends that lend themselves to long-term investment horizons.
We evaluate risk and reward based on our expectations of company fundamental performance.
We value assets relative to market and growth prospects.
We monitor our investments closely. If we believe the investment prospects are less than we expected, we remove the stock from the portfolio.
The objective of this strategy is to provide exposure to a segment of the U.S. equity market that has historically exhibited less volatility, superior risk-adjusted returns and lower relative correlations than the broader equity market.
|$250,000 to $5,000,000||60 bps|
|Next $5,000,000||55 bps|
|Next $15,000,000||50 bps|
|Next $25,000,000||45 bps|
|Next $50,000,000||40 bps|
|More than $100,000,000||35 bps|
Stocks are judged for suitability based on both fundamental financial information and price volatility. The portfolio is rebalanced once a year providing the potential for tax-sensitive management. Companies are measured along three primary dimensions:
Stock Price Risk:
Companies are evaluated based upon their systematic market risk (as indicated or measured by market beta) and total return volatility.
Earnings & Balance Sheet Risk:
Companies are evaluated based upon the amount of leverage they employ and the variability in their historical earnings trend.
Profitability & Business Risk:
Companies are evaluated based upon various profit metrics such as their historical return-on-equity and growth in profit margins.
A well-diversified portfolio is then built with stocks that possess higher durability scores (i.e. the companies that exhibit higher quality characteristics). While the portfolio undergoes a major rebalance once per year, stocks are also monitored on a monthly basis for extreme events.