The Multi-Cap 80 style has a long term neutral equity allocation of 80% large, mid, and small cap value stocks, which generally ranges from a low of 60% to a high of 100% depending on our market outlook. The remainder of the portfolios are invested in short to intermediate U.S. Treasury securities, agencies, investment grade corporates and cash equivalents.
Equity Approach
The equity portion of this strategy utilizes a fundamental, bottom-up classic value approach. We seek to find high quality companies that are undervalued for transitory reasons. A unique advantage of our process is our proprietary calculation of normalized earnings, or what we believe a company is able to earn in a typical environment over a full business cycle looking out 3 to 5 years. The equity portion of this strategy has the flexibility to invest across the market capitalization spectrum.
Fixed Income Approach
We attempt to preserve capital in the fixed income segment by managing a portfolio of bonds that typically has an overall credit rating of A or better. Fixed Income holdings typically include a combination of treasuries, agencies, and high quality corporate bonds (when the risk versus reward characteristics are favorable). From our high quality universe, we attempt to match the best available opportunities and maturities to the client’s cash flow needs. We typically hold bonds to maturity unless we have an opportunity to capture abnormal capital appreciation, or significant deterioration in fundamentals call into question a bond’s credit rating (quality).