EQUITY INVESTMENT PHILOSOPHY

1. Two investment strategies

Value -the Value style of investing is characterized by stocks trading at a price that is less than their intrinsic value (i.e., companies “on sale”). Value investors typically look for financially sound companies that are currently undervalued by the market due to bad news and/or negative events. In essence, value investing is buying an asset worth $1 for $0.50.

Growth - the Growth style of investing is commonly associated with stocks exhibiting above average long term earnings growth potential. Growth investors typically look for companies with competitive advantages that translate into superior long term earnings growth. In essence, growth investing is the purchase of an asset for $1 with the expectation that it will be worth $1.50 sometime in the future.

Our investment philosophy is based on the interplay of these two investment styles. Portfolios constructed using these two methodologies have historically resulted in lower volatility, since these two complementary investment philosophies tend to be negatively correlated (i.e., one type of stock tends to go up when the other types goes down). In addition, we further diversify the overall equity (stock) exposure by allocating roughly 1/3 of the equity portfolios to international (i.e., ex-US) stocks. These stocks include foreign based companies that are listed (traded) in the US stock exchanges, which means they must abide by SEC standards and file financial statements according to US accounting (GAAP) standards. Commonly known as American Depository Receipts (ADRs), these shares offer exposure to foreign developed and emerging economies.

2. Portfolio Characteristics

Long only
Equally weighted /concentrated portfolios
U.S. traded stocks (NYSE, NASDAQ, AMEX)
All Cap
Low turnover