Portfolio Management

Transcription

1 A Dynamic Approach to Investing The Lighthouse Group at Morgan Stanley Smith Barney Roger Johnson, Vice President, Portfolio Manager, Financial Advisor Scott Langlow, First Vice President, Financial Advisor 2727 Hollycroft, Suite 330 Gig Harbor WA Investments & Services offered through Morgan Stanley Smith Barney LLC, member SIPC

2 The Portfolio Management Group at Morgan Stanley Smith Barney Established in 1979 to provide individual investors with a level of personalized portfolio management typically reserved for major institutional clients All portfolios are managed individually on a fully discretionary basis by a local Portfolio Manager Portfolio Management Program offers you: Direct access to your portfolio manager Personalized services from a dedicated professional A disciplined, interlinked investment process Ongoing and comprehensive client communications and reporting A long history of meeting client goals An experienced professional to manage your wealth

3 We listen to clients to understand what is important to them. Each client has unique goals and tolerance for risk. It is our goal to develop customized and sustainable investment strategies, through all market cycles, to help them reach their financial objectives. Scott Langlow, First Vice President, Financial Advisor I believe that to have the potential to make above average returns in the investment markets, you need to be a student of market history, current events, and, most importantly, have a discipline that seeks to reduce the mistakes that mar performance. To be better, you have to be different. Following the crowd can lead to underperformance. If an investment makes people uncomfortable, it s a good sign that I m going in the right direction. Roger Johnson, Vice President, Portfolio Manager Tactical asset allocation incorporates active decisions to overweight or underweight asset classes, in the near-term, relative to their Strategic allocation based on: The current and projected financial and economic environment. Evaluations of risk in global asset markets. Fundamentals and valuations. Psychological, technical, and liquidity factors.

4 Investment Selection Process Individual Stocks Searching for companies that can have the following criteria: Opportunity Projected Earnings and Dividend Growth Projected Target Price Economic Moat- Difficulty for competitors to enter market. Strong Long Term Investment Theme Momentum Who s in charge of the stock right now, buyers or sellers? Evaluation of relative strength. Valuation Dividend Yield Safety of Dividend- is there a risk of a dividend cut? Risk of worst case scenario Current value relative to historical value Price relative to projected growth rate.

5 Investment Selection Process Complementary Strategies We seek to complement individual stocks with successful investment strategies Purchasing closed end funds Adding value by buying funds at a discount to their net asset value. Diverse investment styles Option income Deep discount Fixed income Investments outside our areas of core competence. Small companies International companies Emerging markets Alternative asset classes

6 Opportunistic Growth Strategy Primary emphasis is finding investment opportunities. This portfolio has the most flexibility in what it can own. We own individual companies that allow us to focus on key themes The continued migration of activities to the internet globally Reliance on health care for an aging population Emerging markets growing at a rapid pace creating more affluent consumers for goods and services. Stocks are screened for valuation comparing the companies earning growth rate and Price/Earnings ratio. Where possible, we'll buy companies that have a sustainable competitive advantage over their rivals. Diversification, as a secondary objective, is achieved by investments not correlated with traditional investment markets. Relative to the S&P 500, the goal is: Lower Volatility Higher Yield Broad Allocation Targets the goal is: Equity: % Fixed Income: 0-20%, Cash 0-20% Alternatives 5-15%

7 Primary emphasis is stable income growth Portfolio Management Equity Income Strategy Stocks are chosen for their history of predictable dividend growth. Companies must be able to comfortably pay dividends with their earnings. Companies must have a history of raising dividends. We also buy mutual funds that have option income strategies to help increase yield. Stocks are screened for valuation comparing the companies earning growth rate and Price/Earnings ratio. Where possible, we'll buy companies that have a sustainable competitive advantage over their rivals. Diversification, as a secondary objective, is achieved by investments not correlated with traditional investment markets. Relative to the S&P 500 the goal is: Lower Volatility Higher Yield Broad Allocation Targets the goal is: Equity: % Fixed Income: 10-30%, Cash 0-20% Alternatives 5-15%

8 Moderate Aggressive Asset Allocation Strategy Primary emphasis is diversification consistent with a moderately aggressive risk tolerant portfolio. We own individual companies that allow us to focus on key themes The continued migration of activities to the internet globally Reliance on health care for an aging population Emerging markets growing at a rapid pace creating more affluent consumers for goods and services. Stocks are screened for valuation comparing the companies earning growth rate and Price/Earnings ratio. Where possible, we'll buy companies that have a sustainable competitive advantage over their rivals. Diversification is achieved by investments not correlated with traditional investment markets.(offered by mutual fund/etf) Commodities and Precious Metals Global Real Estate Managed Futures Hedge funds and Alternative Investment Strategies Inflation Protected Securities Relative to the S&P 500 the goal is: Lower Volatility Higher Yield Broad Allocation Targets the goal is: Equity: 60-90% Fixed Income: 5-20%, Cash 0-20% Alternative Investments 10-20%

9 Moderate Asset Allocation Strategy Primary emphasis is diversification consistent with a moderate risk tolerant portfolio. Stocks are chosen for their history of predictable dividend growth. Companies must be able to comfortably pay dividends with their earnings. Companies must have a history of raising dividends. We also buy mutual funds that have option income strategies to help increase yield. Stocks are screened for valuation comparing the companies earning growth rate and Price/Earnings ratio. Where possible, we'll buy companies that have a sustainable competitive advantage over their rivals. Diversification is achieved by investments not correlated with traditional investment markets. (Offered by mutual fund/etf) Commodities and Precious Metals Global Real Estate Managed Futures Hedge funds and Alternative Investment Strategies Inflation Protected Securities Relative to a balanced portfolio of stocks and bonds the goal is: Similar Volatility Higher Yield Broad Allocation Targets the goal is: Equity: 40-60% Fixed Income: 15-30%, Cash 0-20% Alternative Investments 15-25%

10 Moderate Conservative Asset Allocation Strategy Primary emphasis is diversification consistent with a moderate conservative risk tolerant portfolio. Stocks are chosen for their history of predictable dividend growth. Companies must be able to comfortably pay dividends with their earnings. Companies must have a history of raising dividends. We also buy mutual funds that have option income strategies to help increase yield. Stocks are screened for valuation comparing the companies earning growth rate and Price/Earnings ratio. Where possible, we'll buy companies that have a sustainable competitive advantage over their rivals. Diversification is achieved by investments not correlated with traditional investment markets. (Offered within mutual fund/etf) Commodities and Precious Metals Global Real Estate Managed Futures Hedge funds and Alternative Investment Strategies Inflation Protected Securities Relative to a balanced portfolio of stocks and bonds the goal is: Lower Volatility Higher Yield Broad Allocation Targets the goal is: Equity: 30-55% Fixed Income: 20-40%, Cash 0-20% Alternative Investments 15-25%

11 The Lighthouse Group Portfolio Management Program Why Portfolio Management with the Lighthouse Group? Our portfolios are able to focus more of your assets in markets, strategies, and companies we believe offer the best opportunities. Compared to individual stocks our portfolios are adequately diversified to help avoid the risk of making big bets on any one company, sector, or strategy. Our portfolios have greater flexibility to adapt to changing market conditions. With trade discretion we re able to make changes quickly. We don t believe that there is one best way to make money and invest accordingly. Also to consider: Our custom portfolios are seldom 100% invested in the stock market, meaning that it s unlikely your account will capture all stock market appreciation or depreciation. Our custom portfolios don t attempt to time the stock market or trade actively. We increase or decrease market exposure based on our Global Investment Committee s recommendation. The positions we buy are meant to be owned for the intermediate to long term. However, if the reason we bought a position or the primary trend changes, we ll exit the investment as soon as reasonably prudent.

12 Your Team: Focused on Our Clients Scott Langlow, First Vice President, Financial Advisor Registered for 15 years, Scott holds a BA in Business Administration from the University of Puget Sound (1975); A MS in Counseling Studies from Capella University (2012) and is accredited from the Estate & Wealth Strategies Institute, Michigan State University (2005) Focus Areas: Strategic Wealth Planning Direct Line: Address: scott.langlow@morganstanley.com Roger Johnson, Vice President, Portfolio Manager, Financial Advisor Registered for 30 years, Roger holds a BA in Business Administration from the University of Washington (1981). Focus Areas: Portfolio Management and Investment Strategies. As Portfolio Manager, Roger manages tactical model portfolios designed to maximize risk adjusted returns. Direct Line: Address: roger.johnson@morganstanley.com Karin Stuen, Senior Registered Client Services Associate Registered for 12 years, Karin holds a BA in Education from Pacific Lutheran University (1981) Focus Areas: Karin supports the Lighthouse Group team of Financial Advisors and facilitates all client administrative services. Direct Line: Address: karin.stuen@morganstanley.com Toll Free: Fax:

13 An investment in alternative investments can be highly illiquid, is speculative and not suitable for all investors. Investing in alternative investments is only intended for experienced and sophisticated investors who are willing to bear the high economic risks associated with such an investment. Investors should carefully review and consider potential risks before investing. Some of these risks may include: loss of all or a substantial portion of the investment due to leveraging, short-selling, or other speculative practices; lack of liquidity in that there may be no secondary market for the fund and none is expected to develop; volatility of returns; restrictions on transferring interests; potential lack of diversification and resulting higher risk due to concentration of trading authority when a single advisor is utilized; absence of information regarding valuations and pricing; complex tax structures and delays in tax reporting; less regulation and higher fees than mutual funds; and manager risk. Individual funds will have specific risks related to their investment programs that will vary from fund to fund. Actual results may vary and past performance is no guarantee of future results. Investing in commodities entails significant risks. Commodity prices may be affected by a variety of factors at any time, including but not limited to, (i) changes in supply and demand relationships, (ii) governmental programs and policies, (iii) national and international political and economic events, war and terrorist events, (iv) changes in interest and exchange rates, (v) trading activities in commodities and related contracts, (vi) pestilence, technological change and weather, and (vii) the price volatility of a commodity. In addition, the commodities markets are subject to temporary distortions or other disruptions due to various factors, including lack of liquidity, participation of speculators and government intervention. Diversification does not guarantee a profit or protect against a loss. International investing may not be suitable for every investor and is subject to additional risks, including currency fluctuations, political factors, withholding, lack of liquidity, the absence of adequate financial information, and exchange control restrictions impacting foreign issuers. These risks may be magnified in emerging markets. The investments listed may not be suitable for all investors. Morgan Stanley Smith Barney LLC recommends that investors independently evaluate particular investments, and encourages investors to seek the advice of a financial advisor. The appropriateness of a particular investment will depend upon an investor's individual circumstances and objectives. Portfolio Management is an advisory program in which the client's Financial Advisor invests the client's assets on a discretionary basis in a wide range of securities. This material is intended for use only in Morgan Stanley Smith Barney s Advisory Program. My/Our current target allocations are listed below/above. Individual accounts might have different allocations. This material does not provide individually tailored investment advice. It has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. The strategies and/or investments discussed in this material may not be suitable for all investors. Morgan Stanley Smith Barney LLC recommends that investors independently evaluate particular investments and strategies, and encourages investors to seek the advice of a Financial Advisor. The appropriateness of a particular investment or strategy will depend on an investor s individual circumstances and objectives. The views expressed herein are those of the author and do not necessarily reflect the views of Morgan Stanley Smith Barney or its affiliates. All opinions are subject to change without notice. Neither the information provided nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Past performance is no guarantee of future results. Morgan Stanley Smith Barney LLC. Member SIPC.