Uncover Investment Opportunities with Ongoing Portfolio Analysis
Our Tactical Equity Portfolio combines disciplined investment selection, rigorous analysis and other investment strategies to both meet your current income needs with increased cash flow and preserve your portfolio’s principal by offering additional potential downside preservation.
We use a bottom-up process to select individual equities and ETFs, and search for companies that:
- Are established in their industries.
- Demonstrate market leadership.
- Maintain high levels of cash to preserve ongoing operations and fund capital expenditure needs.
- Have sufficient financial strength to rollover any debt coming due, and to finance and grow dividends.
Our search initially begins with the S&P 500, because we believe these established market leaders represent the best opportunities to preserve portfolios again downside losses, while potentially generating growth and income. Depending on current valuations and sector performance, we may purchase equities and/or ETFs, but all selections are built on both fundamental and technical analysis.
In a seemingly unlimited investment universe, we strive to uncover the best opportunities by limiting our search for equities in the following manners:
*Rating: We begin by eliminating any corporations that are not with Moody’s and S&P investment grade credit rating, or an S&P Quality Rating of B or better.
Industry: Next, we search for established leaders by researching corporate strategy, balance sheet and business fundamentals.
**Technology: In the current environment, we believe keeping abreast of technological advances is crucial. We continuously assess developments occurring within numerous industries and analyze each corporation’s commitment to maintaining competitive strategies incorporating those advances.
*Bond ratings, issued by private independent rating services, are a grade given to a bond which is designed to indicate the credit quality of the bond. Bonds rated Aaa through Baa3 by Moody’s, and AAA through BBB by S&P, are typically considered to be investment grade. Investors should note that an investment grade rating does not insure the bond against default and does not guarantee the return of principal.
**Technology and internet-related stocks, especially of smaller, less seasoned companies, tend to be more volatile than the overall market.
We use research from Dorsey Wright and Associates, as well as other traditional technical analysis —such as market performance, past prices and volume — to further scrutinize the investments we consider. Once we approve a company for inclusion in the portfolio, stock purchase points are based on relative-strength analysis and other charting methods.
(Relative strength indicates a stock’s price change over a period of time relative to that of a market index. Technical analysis is only one form of analysis. Investors should also consider the merits of Fundamental and Quantitative analysis when making investment decisions.)
Investment Management and Monitoring
On a daily and weekly basis, team members review current individual company fundamentals, relevant market indicators and technical market data. As portfolio adjustments arise:
Relevant changes are noted and updated within our tracking model, and are discussed at the Investment Committee meeting.
New positions are added to the portfolio when the team agrees both the fundamental and technical indicators merit inclusion in the portfolio.
Positions are removed when target valuations are achieved or when fundamental or technical indicators no longer warrant inclusion.
In order to help minimize downside exposure and support growth, we place “stop loss” orders at the time of purchase for each individual selection. Additionally, we seek to maintain portfolio composition by limiting the percentage of value each equity and ETF may represent, both at time of purchase and after appreciation. As the capital markets change, we may reduce exposure by moving a greater portion of the core holdings to cash.
Advisory programs are not designed for excessively traded or inactive accounts and are not suitable for all investors. Please carefully review the Wells Fargo Advisors advisory disclosure document for a full description of our services. The minimum account size for these programs is between $25,000 and $200,000.