A client’s portfolio reflects both their short and long-term goals. The goal of our portfolio managers is create a well designed portfolio with the aim of constructing a well managed selection of assets. Executive management makes sure that the portfolio has the right amount of discipline and risk strategies in place.
When managing a portfolio we like to have informal discussions at regular intervals in the form of questionnaires and live one to one conversations. This process helps us develop our asset management strategy.
A well managed portfolio will get the intended results based on what the client expects. We develop an approach that allows us to utilize both fixed income and equity securities:
Fixed Income Approach
We use a laddered maturity model that shows the current interest rate of a given environment and the liquidity income needs of each client.
The ladder strategy is where the portfolio of an individual is built to have approximately the same amount invested in maturity within a given scale; this helps reduce interest rate risk. Typically we purchase securities and hold them to maturity. Depending on the client’s risk tolerance and tax circumstances, we develop customized laddered portfolios of a variety of holdings.
Equity Approach
We employ a proprietary process when it comes to building equity portfolios. It’s a process that is disciplined and focuses on stock selection and risk management. Our research teams over the years have fine tuned the process.
We keep a well discipline diversification strategy, putting more weight on the companies that we believe will outperform other industries over the short term. We are always looking to realize superior returns for our clients with the least possible risk.
When HCS Worldwide has decided on which securities to select, we always confirm the investment selection with our analysts. We prepare the forecast based on future economic growth and current and expected interest rate movements. This will help us determine which industries will perform well over the coming years. Within each of the industries our analyst can look at specific company’s projected and current positions.
Growth Analysis
Our analysts forecast potential growth by analyzing sales, earnings, dividends and projected cash flows. We do this by studying product lines, margins of the industry and the economy. Looking at the company’s historical growth and analyzing fluctuations versus others in the marketplace.
Financial Strength
When assessing the financial strength of a company we do an intricate ratio analysis, moving beyond the financial statements we look at the intricacies of the company’s legal documentation from the SEC to complete our due diligence.
Qualitative Management Assessment
Our analysts need to know the management to make a recommendation on a stock. In order to know the company’s management our analysts will attend meetings, seminars and presentations with senior managers. They go on road shows and travel to corporate facilities and take an active part in the due diligence process.
Risk Analysis
We look at risk from a quantitative and qualitative viewpoint. On a qualitative basis we use the Five Forces [Porter 5 forces] model to look at any potential threats. Quantitatively, we look at proprietary data regarding insider ownership and institutional trends. More analysis is conducted to look at the correlations of a company’s stock returns with the return of the market.
Valuation Analysis
In more mature predictable parts of the economy we look at stock price activity in terms of annual sales, dividends, book value, cash flow and earnings relative to the index associated with the stock. Ratio range parameters are determined then adjusted based on the trends of a company’s growth and profitability. The adjusted range is applied to the key sales, earnings and cash flow forecast.
Fixed Income Philosophy
The main objective of our fixed income approach is to nurture the principle investment. By having a conservative and discipline process we can be sure of stable and competitive rates of return with minimal volatility. We put an emphasis on high quantity holdings that have a gradual approach to portfolio shifts.
Equity Philosophy
Our research department has a two-pronged attack when they analyze different equities. The stocks must meet a very high standard of fundamental attributes; they also must be made relative to the unique needs of the portfolio’s style. The main benefit of this process is that you can be in a position to pre-determine goals from the beginning.
HCS Worldwide portfolio managers are vigorously selected to be able to implement the right strategies between diversification and high performance potential in the markets. The manager brings together the necessary experience, judgment and research of the investment.