Growth Strategies

Fund of Mutual Funds Portfolio

The fund-of-mutual-funds (FMF) strategy is designed to expose clients’ portfolios to a range of capitalization sizes (large-, mid-, and small-cap) and distinct actively managed styles (value and growth). The concept behind this approach is to take advantage of an optimal mix of capitalization ranges and equity style to influence total return over the long term.

The fundamental asset allocation of the FMF strategy stands at 40%-40%-20% across large-, mid-, and small-cap securities and 50%-50% between value and growth.

This multicap strategy can quickly drift far in one direction or another given the volatility of each market capitalization. The FMF strategy follows an active investment disciplined of reallocating assets of the portfolio back to the predetermined target allocation. This procedure allows us to maintain the effective, long-term allocation among styles and capitalization ranges established for clients’ portfolios; and serves to better weather the ups and downs of the markets (overall portfolio volatility or risk) by reducing the exposure to funds that have recently outperformed and adding to funds that have underperformed or are currently out of favor.

Growth at a Reasonable Price (GARP) Strategy

The GARP strategy focuses on investing in financially strong companies with unique products and services. We look for companies that are growing revenues and earnings faster than the overall market, but that trade at reasonable prices. We pay close attention to the overall portfolio and individual security valuations as measured by price to earnings, price to cash flow and price to sales ratios.

The GARP Portfolio is based upon our bottom up security selection investment strategy. The portfolio is composed by companies that we expect to hold over time to realize their intrinsic value. We believe that companies growing revenue and earnings faster than the overall market will have long-term superior price performance. The GARP strategy is designed to achieve excess total return with controlled risk.

Alternative Portfolio Strategy

The objective of the alternative investment strategy is to establish a diversified allocation of international and domestic equities and fixed income mutual funds to optimize the risk/reward profile of the portfolios. By including alternative asset as part of an overall portfolio, investors will have exposure to other companies and economies that often grow at varying rates at varying time periods.

Our philosophy is to optimize the risk-reward profile of the portfolios by investing in foreign and domestic alternative assets. We know that diverse asset classes often behave differently from each other in various economic environments and that global markets can add useful diversification to the portfolios.

The overall asset allocation for this strategy is 20% in domestic equities securities, 60% in international funds, and 20% in domestic and international fixed income securities. The domestic stock allocation is to the real estate sector and domestic convertibles securities. The international market allocation integrates the emerging-markets, Europe and Asia markets. The international equity markets provide access to the upside potential of the world’s emerging markets while their geographic range moderates the risks of investing in foreign markets. On the other hand, the fixed income securities represent foreign and domestic high-yield issues that tend to boast modest volatility levels with long-term returns.

Momentum Strategy

The Momentum Strategy selects ETFs and mutual funds securities based on near-term performance—a combination of the last 12, 6, 3 and 1-month returns. We believe that strong, recent performance is a good predictor of near-term success and consider the Momentum strategy as a disciplined way of taking advantage of its holdings’ relative strong performance.

No one investment approach can always excel because market environments change. Market leadership rotates between different areas and there is always some area bringing in good relative returns. The Momentum strategy aligns the portfolio with the current market leadership. In other words, it takes advantage of the strongest areas of the market and continually moves toward new market trends. The strength of the Momentum strategy comes from detecting and exploiting sustained trends in market leaderships.