Diversified Balanced

Competitive Performance With Lower Risk

We utilize a three-tiered approach to put our Diversified Balanced strategy into practice:

  1. Determine allocation among major asset categories
  2. Further allocate among various asset classes to improve diversification
  3. Select vehicles that reflect appropriate characteristics within each style

The allocation is then reviewed on an ongoing basis and rebalanced as needed. We can manage to any existing allocation policy or help clients develop the policy that best meets their needs.  The mix of securities and funds selected is adjusted proportionately to the client's specific needs.

When developing allocations, we use a structured methodology incorporating three inputs to help us develop an accurate appraisal of the risk/return potential:

  1. A relative value model (stocks v. bonds) allows us to determine an expected return premium, which we can then compare to long-term averages.
  2. Valuation (relative to history) helps us to determine whether asset classes are over- or undervalue
  3. We assess liquidity by examining monetary trends, as well as the level and direction of short-term interest rates, to determine the economy's effect on financial markets.

Client investment policy and our judgment on the weight of the evidence from these methodologies are translated into the portfolio allocation.


Since 1985, the heart of our investment approach has centered around a company's ability to sustain or improve its earnings power, as defined by return on capital or return on equity.  We select investments from a universe of established companies with large, medium or small capitalization by focusing on those firms we believe have the potential to generate strong earnings power and whose valuation suggests that they are underpriced.  Central to our philosophy and process is a unique way of diversifying the portfolio across industries to manage risk.

We use a rigorous four-step process to identify companies capable of generating greater earnings power, or value, which sell in the market at low valuations.

  1. Generate investment ideas from carefully chosen research sources
  2. Build a case for a particular holding by identifying reasons the company may achieve or sustain above-average return on capital and/or equity. Measure the attractiveness of current valuation of earnings power.
  3. Assess the strength of the investment case.
  4. Determine the enhancement to the portfolio. The selection is expected to have a positive impact on the overall portfolio and diversification.

In certain circumstances, the application of mutual funds and exchange traded funds may most appropriate for one or more equity classes. In these cases we employ a rigorous due diligence and fund selection process:


Similar to the firm’s equity philosophy, our fixed income approach is bottom-up with an emphasis on relative value and the goal of producing a better return over the long term.

As price fluctuations can be volatile, income is a more predictable component of total return and primary aspect of our strategy. Accordingly, we build portfolios that emphasizes value and income while de-emphasizing potential risk by:

  1. Actively managing issues, sector, quality and yield curve positions
  2. Focusing on maximizing the overall portfolio income level
  3. Seeking quality by using investment-grade issues (BBB and above)
  4. Managing interest rate risk by constraining duration around a target benchmark (We can manage portfolios to a wide variety of benchmarks) 
Competitive Performance With Lower Risk