Managed Account Strategy Summaries
Capital Appreciation Strategy
The Capital Appreciation Strategy will invest up to 100% in
equities. The primary focus of this strategy will be
investments in small- and medium-sized U.S. companies. The
overall goal for your account under this strategy is maximum
capital appreciation, and no dividend income is expected.
Investors in this strategy are interested in maximum growth, and
are willing to endure the volatility and short-term trading that
this may entail. In order to build real
(inflation-adjusted) wealth over time, they understand they must
invest in assets that potentially can (in unfavorable markets)
show a capital loss over significant time periods, sometimes
measured in years. Unlike our other objectives, there may be no
diversification into international markets, so performance
volatility may be greater during both market rises and declines.
Global Growth Strategy
The Global Growth Strategy seeks long-term growth of capital
by investing in equity securities listed on U.S. and foreign
stock exchanges. Dividend income is not a specific goal of
this strategy, under which portfolios may be invested up to 100%
in equities. Maximum growth investors are total return investors
who are primarily interested in capital appreciation and are
willing to take visible risks to achieve their goals.
Current income is clearly a secondary concern. In order to
build real (inflation-adjusted) wealth over time, they
understand they must invest in assets that potentially can (in
unfavorable markets) show a capital loss over significant time
periods.
Balanced Strategy
The Balanced Strategy seeks to provide both growth and income
for client portfolios, and is limited to a maximum equity
exposure of 75%. Growth and income investors are interested in
total return and use income to reduce risk. They want to
preserve the real (inflation-adjusted) value of their capital
while achieving an income stream from it. They understand that
this goal requires assuming at least a moderate risk. They
realize that their portfolios can, in unfavorable markets, show
losses over a one-to-two-year period. However, they want
portfolios in which cumulative negative total returns are
unlikely over significantly longer periods of three to five
years.
Income Strategy
The Income Strategy seeks to provide current income for client
portfolios, with capital appreciation a secondary goal, and is
limited to a maximum equity exposure of 50%. Income and growth
investors are conservative investors who place considerable value in
a relatively stable income stream and whose requirement for more
than nominal wealth enhancement is clearly secondary. These
investors understand that stocks and bonds can be volatile assets;
they are risk-averse and concerned with the prospect of capital
losses other than for a short time period of one to two years. The
income goal is natural for these investors, since quality
income-producing assets tend to lessen capital loss over anything
but short time periods, at the cost of a significant reduction in
long-term real (inflation-adjusted) wealth creation.
Fixed Income Strategy
The Fixed Income Strategy seeks income and maintenance of
inflation-adjusted purchasing power for client portfolios. Under
this strategy, only fixed income investments will be purchased.
Fixed-income investors are either very conservative or require a
significant level of income from their investments. They want low
volatility and a low probability of substantial capital losses. As
such, they will concentrate on fixed-income investments (bonds) and
have little or no equity (stock) exposure. They will avoid
volatility but at the near-certain cost of a significant reduction
in the long-term growth of their real (inflation-adjusted) wealth.