Asset allocation and stock selection is our key component and is the most important determinant of investment performance. Our objective is to find those special companies, either large or small, that we believe will have continuing growth over an extended period of time. We undertake extensive independent investment research analysis to develop an in depth knowledge of each of our equity holdings. We meet with company management, rigorously scrutinize their financial statements and closely monitor their progress. In order to outperform the market averages for the assigned asset class without taking on undue risk, it is imperative portfolio managers conduct research beyond the databases and brokerage reports relied upon by others. Our stock selection is based on independent thought and research without being exposed to external pressure in any buy or sell recommendations. We maintain a healthy scepticism of consensus opinion and fundamental wisdom.
Our investment research analytical process also includes several "quantitative research" and technical analysis techniques as aids to improve market timing and in selecting the most advantageous entry and exit points. We look for limited downside risk coupled with the opportunity for above average earnings. Stocks may be held in the portfolios for extended periods of time provided we continue to have confidence in their growth potential.
For some of our clients, our philosophy is centered on the growth of capital rather than its mere preservation. In fixed income management, our primary objective is to protect the capital value of client portfolios. With this objective in mind, our practice is to hold a diversified portfolio of high quality bonds and money market instruments. To add value, we actively manage the term structure and sector weightings of the portfolio. We project the direction of interest rates based on our analysis. This helps in determining the most appropriate term to maturity and credit risk preferences. We use multi-economic scenarios with the most probable outcome identified, and select only senior quality bond issuers.
