The EQUITY INCOME PORTFOLIO is a weighted equity long portfolio of primarily 25 stocks that are focused exclusively on the average global consumer monthly spending habits. The Portfolio seeks to generate attractive relative returns with low volatility from companies the management feels are undervalued. The Portfolio focuses primarily on U.S large-cap stocks, but can invest in mid to small cap equities and foreign companies as well. The portfolio typically maintains a net exposure of 99% or more in equities and 1% or less in cash. The portfolio does not use any leverage and is re-balanced semi-annually.
The EQUITY INCOME PORTFOLIO was designed and created to truly capitalize on consumers monthly spending. Each month, consumer’s eat food, fruits, snacks, and drink all different kinds of beverages, take medicines, use gasoline to commute, use electricity and water, use the internet, or phone for communication and entertainment, pay for car insurance, health insurance, and property insurance for home owners, they clean their houses, wash their clothes, take out their trash, clean and maintain their bodies, they pay their debts, credit cards, student loans, mortgages, car notes, and bank loans. These are the things consumers do each month to survive. The portfolio does not concentrate on the retailers where they purchase some of these products, but companies that provide, produce or manufacture these products to the consumer.
The EQUITY INCOME PORTFOLIO is managed using three key elements:
- Capitalize on global consumers monthly spending habits;
- Recognize that Dividend Growth is the hallmark of portfolio quality; and
- Apply a factor-based portfolio management approach.
The portfolio has a target range of maintaining 25 stocks and is currently price weighted. The 25 stocks are selected from the sectors that produce, process, manufacture and provide services that the consumer spends money on each month. The Portfolio focuses primarily on U.S large-cap stocks, but can invest in mid to small cap equities and foreign companies as well. The Portfolio will not invest more than 20% in any specific sector (Food, Beverage, Confectioner, Household & Personal Hygienic, Media & Telecom Services, Drug Manufacture, Insurance, Financial, Utilities, Oil & Gas, Waste Management, Tobacco, Etc). Even though some companies may have retail distribution the management does not focus on the retail sector. The portfolio does not use any leverage and is re-balanced semi-annually. The portfolio typically maintains a net exposure of 99% or more in equities and 1% or less in cash, but can re-adjust to a maximum of 75% cash and 25% net exposure in equities when management feels appropriate to manage risk.
The strategy is available through a separately managed account.
Walter M. Hester, Sr. Portfolio Manager manages the Portfolio to adhere to a simple strategy of investing in a weighted portfolio of 25 stocks consisting of sectors that the average consumer spends monies on each month.
Even though the portfolio has some companies with retail distribution, the portfolio is not weighted to that sector and is not focused on the retail end, but is made up of manufacturers, distributors, and service providers for each one of the sectors selected.