It is our belief that superior investment performance, which we define as generating premium returns over time relative to the S&P 500 as well as managing risk by minimizing periods of negative returns, is best achieved through:
- Proper and timely S & P 500 Sector positioning and,
- By owning market-leading, financially strong companies within favored Sectors and Industries.
The core of our investment philosophy is that particular Sectors and
Industries tend to perform well in certain phases of the economic
cycle.
Accordingly, our fundamentally driven, top-down analysis of the business cycle and secular trends is central to our investment methodology. Our belief is that proper sector positioning -- overweighting Sectors with an economic tailwind, and, at least as important, avoiding out-of-favor Sectors -- allows us to maintain a timely portfolio that can produce both high upside and low downside capture ratios.
The universe that we use to select our securities is the S&P 500.
Our approach with this portfolio is fundamentally driven, employing
a top-down, Sector-driven process.
We focus on secular and cyclical economic trends that favor certain S & P 500 Sectors, Industries and companies. Market-leading, large capitalization companies in those favored Sectors and Industries are identified.
These companies must meet stringent financial qualifications such as
high and accelerating earnings growth, low debt/equity ratios and
high returns on equity.
As our forecasted fundamental economic backdrop changes, clients’ holdings are shifted to leading companies in the newly favored Sectors and Industry groups. Sectors and Industry groups are thus overweighted or underweighted versus the S&P 500 Index.