Methodology
- The Moderate Strategy is designed to produce long-term total return, by combining current and growing dividends with appreciating share prices and income from bonds.
- The strategy will consist of approximately 40 predominantly Large Capitalization stocks, and investment grade bonds, based on each client’s specific needs.
- The strategy will seek broad diversification across most of the major economic sectors. A top-down investment approach to these broad sectors will be taken to determine the desired sector exposure of the strategy. A bottom-up approach to stock selection will be applied thereafter.
- The moderate strategy will allocate to asset classes sectors that are favored in the current economic cycle. The strategy is aiming to exceed its index return with less volatility.
Stock Selection Process
Top-Down Sector Approach: Determine what we believe are appropriate weightings for sector and subsector exposure within the strategy.
Bottom-Up Stock Analysis: Leverage the Equity Research resources available for fundamental analysis of individual stocks. We will maintain a Large Cap Income bias to stock selection, and attempt to stick with companies that we believe can consistently increase their dividends over time.
Construction: Select what we believe are the best stocks that fit into our desired subsectors and complement each other in order to meet the strategy’s conservative objective. Select bonds to complement the stock strategy with the same selection process. Focus will be given to high quality, income producing, non-correlating assets.
- Alternative Assets: A small percentage of the strategy for non-traditional assets that provide a better risk/return analysis than the traditional assets.
Equity Parameters
Market Cap – $500 MM plus (All Cap)
Price to Free Cash Flow – Under 50
PEG Ratio – Under 2
EPS Growth next 5 Years – Positive
Beta – Strategy Under Average of 1
Index Benchmarks
60% – S&P 500 Index
40% – Barclays Aggregate Index
Definitions
S&P 500 – The S&P 500 is an unmanaged index of 500 widely held stocks. It is not possible to invest directly in an index.
Weighting – Sector Percentage (%) of S&P 500.
Market Capitalization – The total dollar market value of a company’s outstanding shares; represents a company’s size.
Beta – Measure of volatility in comparison to the market as a whole.
Dividend Yield – Dividends Received dividend by Price; reflects the % return from dividends received.
Other Strategies
Past performance does not guarantee future results. There is no assurance the strategy will meet its objectives. The market value of securities fluctuates and you may incur a profit or a loss. Diversification does not guarantee a profit nor protect against a loss. Dividends are not guaranteed and will fluctuate.
Material is provided for informational purposes only and does not constitute a recommendation.
Any opinions are those of the Investment Manager(s) and their team and not necessarily those of Raymond James. Opinions are subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security outside of a managed account. This should not be considered forward looking, and does not guarantee the future performance of any investment.
All investments are subject to risk, including loss. There is no assurance that any investment strategy will be successful. Asset allocation and diversification does not ensure a profit or protect against a loss. It is important to review the investment objectives, risk tolerance, tax objectives and liquidity needs before choosing an investment style or manager.
This Fact Sheet is not intended to be a client-specific suitability analysis or recommendation. Do not use this as the sole basis for investment decisions. Do not select an investment strategy based on performance alone.
The individual(s) mentioned as the Investment Manager(s) are Financial Advisors with Raymond James participating in a Raymond James fee-based advisory program. This is an investment advisory program in which the client’s Financial Advisor invests the client’s assets on a discretionary basis in a range of securities. Raymond James investment advisory programs may require a minimum asset level and, depending on your specific investment objectives and financial position, may not be suitable for you.
In a fee-based account clients pay a quarterly fee, based on the level of assets in the account, for the services of a financial advisor as part of an advisory relationship. In deciding to pay a fee rather than commissions, clients should understand that the fee may be higher than a commission alternative during periods of lower trading. Advisory fees are in addition to the internal expenses charged by mutual funds and other investment company securities. To the extent that clients intend to hold these securities, the internal expenses should be included when evaluating the costs of a fee-based account. Clients should periodically re-evaluate whether the use of an asset-based fee continues to be appropriate in servicing their needs. A list of additional considerations, as well as the fee schedule, is available in the firm’s Form ADV Part 2 as well as the client agreement.
ASSET CLASS RISK CONSIDERATIONS
Equities: Investors should be willing and able to assume the risks of equity investing. The value of a client’s portfolio changes daily and can be affected by changes in interest rates, general market conditions and other political, social and economic developments, as well as specific matters relating to the companies in which the strategy has invested. Companies paying dividends can reduce or cut payouts at any time.
Fixed Income: All fixed income securities are subject to market risk and interest rate risk. If fixed income securities are sold in the secondary market before maturity, an investor may experience a gain or loss depending on the level of interest rates, market conditions and the credit quality of the issuer. There is an inverse relationship between interest rate movements and bond prices. Generally, when interest rates rise, bond prices fall and when interest rates fall, bond prices generally rise. Please note these strategies may be subject to state, local, and/or alternative minimum taxes. You should discuss any tax or legal matters with the appropriate professional.
