Diversified portfolio with 25-30 holdings of stocks in companies (in the CIO's judgement) that are expected to have a higher relative profitability during periods of rising interest rates because of their industry and their financial position. In other words, companies with relative pricing power during periods of inflation and financial “staying power” during periods of recession or stagflation. Companies must pass a screening process that compares EBITDA and Cash on Hand to Debt. Stocks are concentrated in Health Care, Technology, and Energy. (Financial Services stocks are avoided.) Returns in the short run can be highly affected by actions of the US Federal Reserve and other headline risk. FOLIO uses ETF that moves up in value when interest rates rise as well as ETF that tracks Treasury Inflation Protected Securities.The FOLIO may lag the S&P500 significantly during periods of interest rate decline and hence is more risky during transition periods. It should be categorized as “volatile” and suitable for only a portion of a diversified portfolio. Standard Deviation expected to be 120-140% of S&P500. Target Beta is approximately 0.90.
Past performance does not predict future performance. Exposure to this FOLIO assumes some probability market expectations for rising interest rates and inflation.
No comments:
Post a Comment