Active Management

We believe that the markets are not always rational and have inefficiencies that present opportunities to take advantage of. We construct investment portfolios that provide superior risk-adjusted returns by utilizing diversification and risk reduction strategies. These portfolios will combine both passive and active investment strategies, which in our opinion, complement each other to achieve the desired objectives for the client.

We use an investment strategy with a bias towards sector rotation using fundamental, technical & quantitative analysis to identify undervalued securities. A style-agonistic approach will be used in the search for undervalued securities and will involve the combination of ETFs and individual securities into one focused portfolio.

The active portion of a portfolio will consist of 10-20 individual securities. These positions will be selected to enhance the overall portfolio performance. In addition, the market will sometimes present opportunities where it is prudent to overweight an individual holding.

Absolute returns are the goal for all portfolios. Risk reduction strategies will include strategic asset allocation, sector over or under-weighting, stop-loss orders, moving funds to cash and employing Bear ETFs.

Security selection process

We begin security selection with a macro top down outlook to assist in identifying interest rate direction, sectors to overweight and underweight and currency exchange risk. After the macro overview and appropriate asset allocation has been determined, we will screen investment candidates to find those that match our requirements.

In the case of individual stocks, we will buy leading companies that are trading at reasonable valuations. Valuations can be determined by P/E, Price to Book, dividend yield and other quantitative measures. Technical analysis may be employed to improve market timing decisions. Price & valuation is critical, as stocks with a margin of safety generally give more downside protection.