Strategy
Portfolio management is the enactment of your investment objectives and constraints in the financial markets.
Asset Allocation
Asset allocation refers to the percentage of the investment portfolio that you assign to various asset classes. Appropriate asset allocation is based directly on your Investment Policy Statement. To a large degree, asset allocation will determine your portfolio’s short-term volatility and long-term returns.
Risk/Reward Tradeoffs
| Asset Class | Advantages | Disadvantages |
| Stocks | Long-Term Growth | Short-Term Volatility |
| Bonds | Regular Income Relative Stability |
Limited Growth |
| Cash & Money Markets Treasury Bills | Relative Safety | No Growth Limited Income |
Portfolio Management Strategies
Your investment portfolio can be built by investing directly in a portfolio of individual stocks and bonds, indirectly through mutual funds or with a combination of both individual securities and mutual funds.
Individual Security Strategies
Stocks represent ownership in an underlying business. We select individual stocks for purchase through a rigorous fundamental screening, including both quantitative and qualitative analysis.
Our objective is to build you a portfolio of high-quality businesses at attractive prices.
In general, we use a contrarian, or “out-of-favor”, approach that seeks to take advantage of short-term fluctuations in the stock market for our clients’ long-term gain. Our individual stock portfolios are comprised of approximately twenty-one stocks that meet our value criteria and that are diversified across a wide range of industries.
Our fundamental analysis focuses on:
- Owner’s earnings
- Operating margins
- Growth rates
- Return on equity
- Debt ratios
- Industry position
- Price point
- Price ratios
- Dividend history
Bonds represent the debt of an underlying business or government. We select individual bonds based on financial quality, current yield, and total return characteristics. Bond maturities can be selected to meet specific time objectives or can be managed on an ongoing basis through a bond ladder that has a range of maturities.
Cash/Money Markets/Treasury Bills/ and other Cash Equivalents are selected based on their relative safety, liquidity and current yield.
Mutual Fund/Index Strategy
Peak’s Mutual Fund/Index Strategy combines the benefits of index diversification with an asset allocation discipline.
Your portfolio is diversified across core asset classes through index-based mutual funds based on your Investment Policy Statement.
Core asset classes include mutual funds representing:
- US large-capitalization stocks, example: S&P 500
- US mid-capitalization stocks, example: S&P 400
- US small-capitalization stocks, example: Russell 2000
- International large-capitalization stocks, example: EAFE index
- Commodities, example: Dow Jones-AIG Total Return Index
- Fixed income, example: Shearson-Lehman Aggregate Bond Index
- Cash equivalents, example: US Treasury Bills
Once the assets have been allocated, Peak monitors the allocation levels and rebalances when material shifts in allocation levels have occurred.
Additional asset classes may be included to meet your specific needs and objectives. Other potential asset classes include: emerging markets, US government zero coupon bonds, real estate investment trusts (REITs), gold, high yield corporate bonds, individual country indexes and individual US market sectors.
Combining Strategies
Our Individual Security Strategies and our Mutual Fund/Index Strategy provide an attractive complement to each other and may be used in combination. Similar to the rebalancing discipline applied in our Mutual Fund/Index Strategy, once the original allocation between the strategies is determined, the allocation is rebalanced as needed, taking advantage of the strategies that have performed well and adding to the strategies that have underperformed. Since all strategies go in and out of favor over time, the rebalancing discipline takes profits as strategies are in favor and adds money when they are out of favor.