INVESTMENT METHODOLOGY

We apply modern portfolio management techniques to investment planning, portfolio design, security selection and account administration.

Investment planning is intended to assess the client’s financial position and destination; where they are and where they want to go. The process begins with a sober assessment of current resources and then proceeds to clearly define economic objectives.

Portfolio design is accomplished by evaluating what types of investments are suitable: investment mechanics vary; suitability depends on variables such as how an investment is taxed, its price volatility, liquidity and or its ability to generate income. We focus on the overall asset class composition of the portfolio. The percent allocation of stocks, bonds, real estate and cash plays a large part in the success of an investment strategy; “Asset Allocation” is the primary determinate of risk and return in a portfolio.

Security selection funds the asset class allocation with appropriate securities. Security selection is a fundamental and technical evaluation process. Our fundamental economic research guides us in “what” to buy, where-as our technical capital market research guides us in “when” to buy or sell. Prudent security selection augments investment success.

Account administration concerns itself with brokerage correspondence, financial clearing, performance evaluation and reporting. Personal, social, political and economic conditions will change. In a dynamic environment its essential to evaluate, measure and monitor performance on a timely basis to proactively adjust as circumstances deem necessary.

Principals of total return, core/satellite and low expenses govern our investment methodology.

Our Total Return approach dampens portfolio volatility. This is accomplished by augmenting returns with cash flow from dividends and interest while continually seeking to create capital gains through price appreciation.

Core/Satellite approach refines the traditional asset allocation theory by helping us manage active risk through an efficient blend of passive and active asset class holdings. Passive (index) positions form the core component of our portfolios, while active asset class holdings are employed as satellites in an attempt to achieve an optimal risk adjusted rate of return. We believe passive positions tend to perform more consistently in the efficient markets, where as active management in satellite tends to add value in the less efficient markets or sectors.

Low expenses lighten the burden of portfolio expense drag. We accomplish this through the use of Exchange Traded Securities (ETFs). The expense ratios for ETFs tend to be significantly lower than those of traditional mutual funds with diversification still the key benefit. Higher expenses can adversely affect fund performance. In addition, ETFs offer price specificity and hedging capabilities not available with traditional mutual funds. Furthermore, the modularity of ETFs allows our Core/Satellite approach to be adapted to nearly any asset class, style, sector or strategy providing more precision in our attempt to manage portfolio cost, risk and return.

We believe that our approach to portfolio management provides the returns of specific sector, style and capitalization segments without the risk and costs associated with other active portfolio management methods.