At Two Point Capital Management, we offer our clients three investment strategies, depending on their objectives and risk tolerance. Which of the following strategies is most appropriate for you? Contact us.
Strategy 1 : All Equity
This is our cornerstone strategy. Like all of our strategies, it is based on optimizing the value/quality relationship for each investment and the entire portfolio. Read more about the Two Point Investment Approach.
All Equity portfolios are comprised of 15 to 35 stocks and frictional cash (see definition below). We manage each portfolio to maintain a balance among stocks of different size, industry and quality levels.
The purchase and sale of investments is executed aggressively and may generate significant trading activity, which may occur in intense bursts as dictated by changing market conditions and portfolio composition.
The objective of this strategy is to outperform the broad stock market as measured by a full market cycle of the Russell 3000 Index.
Annual turnover has ranged between 25 and 75 percent, but could be higher depending on opportunities presented by changing market conditions.
Strategy 2 : Equity + Fixed Income
Balanced Account portfolios contain equities and bonds.
The equity portion is managed under our All Equity strategy (see above) with the same objective.
To reduce the portfolio’s stock market risk, the balance of the portfolio is comprised of high-quality, fixed-income securities that are often held to maturity.
Our objective in determining the specific proportion of your portfolio to be invested in fixed-income investments is to assure your comfort with the level of risk.
“The more time you invest in understanding yourself, your financial goals and your options, the more easily you will sleep at night.”
— Jack McGowan
Strategy 3 : Concentrated Aggressive Equity
The Concentrated Aggressive Equity strategy is also based on the Two Point analysis of value and quality. Portfolios managed under this strategy are both more concentrated—fewer, larger positions—and more aggressive; lower quality companies are considered if the value/quality relationship appears particularly attractive.
Cash positions are frictional(see definition below).
By limiting investments to a small number of large positions, this strategy contains substantial security-specific risk, and the possible inclusion of lower quality investments may add to this risk. Strong or weak performance by a single investment will have a considerable impact on investment returns.
The objective of this strategy is to significantly outperform the broad stock market as measured by a full market cycle of the Russell 3000 Index.
Frictional Cash under the Two Point Approach
As a result of the simultaneous focus on valuation, quality and portfolio composition, cash positions are “frictional.” Money market holdings are not targeted to be a certain percentage of assets managed, but are the result of a management process focused on the more important aspects of the portfolio.
As a result, money market holdings, like equity holdings, may change rapidly and with significant swings.