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Investment management using direct ownership of individual stocks, allowing for transparency, nimbleness, tax management and customization.
The Core portfolio seeks to own shares of the best businesses defined by compelling financial characteristics and disruptive catalysts to drive sustainable long-term price appreciation. The portfolio is optimized for companies with high returns on equity (ROE), high free cash flow yields, robust revenue growth and an overall valuation similar to that of the S&P 500. The strategy maintains a long-term time frame of five years, resulting in low turnover and allowing time for companies to reach their full potential.
The Core strategy is managed using a long-term constructive view of the economy and stock market. While the management of Core does not involve market timing, the presence of a flat or inverted yield curve will signal a more defensive stance away from the long-term strategy.
The Income and Appreciation portfolio is comprised of highly rated stocks according to Beacon Trust’s multifactor models. A blend of growth and value, the portfolio holds about 40 stocks with a minimum capitalization of $2 billion. There is an emphasis to generate a dividend yield significantly higher than the S&P 500. The Income and Appreciation portfolio is actively managed with constant portfolio manager oversight, risk management and a process-driven trading strategy.
The Income and Appreciation portfolio includes: Current Income, Capital Appreciation and Total Return. In stock selection, we attempt to be cognizant of portfolio risk characteristics. While subject to the volatility of markets, the portfolio has historically been competitive, meeting or approaching relative benchmarks.
Launched in December 2013, FIRM, an acronym for Factor Information Return Model, utilizes factors in the portfolio construction process. Factors are underlying exposures that explain and drive stock returns. The factor approach provides opportunity to replicate the best parts of the market, can provide diversification, avoids overexposure to growth and large-cap biases, and avoids poorly compensated risks.
FIRM utilizes three transparent factors that have historically driven above-average stock returns:
The portfolio is constructed from the S&P 500 universe by ranking the aforementioned factors independently utilizing a screening process. The monthly reconstitution process replaces stocks falling short of the factor standards with higher ranking stocks in each quartile. The process is predominantly quantitative, thereby reducing fundamental judgments and portfolio manager biases in stock selection.