Developing an Investment Policy Statement for the Client
Our one-to-one approach begins with our first meeting with the client. After learning about the client’s financial situation and analyzing the client’s assets, we work with the client to develop an Investment Policy Statement that will guide our construction of the client’s portfolio. The policy statement sets forth the client’s investment objectives, risk tolerance, time horizon, and unique financial needs. Using this information, we help the client establish allocation ranges for the various classes of assets in the portfolio.
Our tailored approach, of course, lends itself well to individual IRAs. It is also effective with retirement plans. By meeting with the trustees of the plan, we can formulate a policy statement that will advance the retirement interests of the participants.
Taking a Diversified Approach
Sterling Capital Management believes in diversifying assets to manage risk. The primary classes of assets in which we invest client funds are stocks, bonds, and cash equivalents. Unlike the majority of our competitors, we purchase individual stocks and buy bonds from single issuers. Only in certain instances do we utilize mutual funds and ETFs and thereby “farm out” the security selection function. Buying and selling individual stocks and bonds obviously requires more time and effort on our part, but it has the clear advantage of allowing us to choose only those specific stocks and bonds we believe suitable for our clients.
Identifying Stocks for the Portfolio
We purchase stocks for our clients only after we have performed extensive fundamental research. The ultimate goal is to identify common stocks that are selling at a discount to their value. We believe this value will eventually be reflected in the price of the stock.
In general, we prefer stocks that trade at price/earnings multiples below their usual valuation levels but still maintain the potential for superior earnings growth. We also look for stocks whose tangible assets are substantially undervalued and those that have above-average dividend yields.
We recognize that not all low-priced stocks are values. Consequently, we devote a substantial amount of time and resources determining which of our prospects for purchase are values and which are just cheap.
We have no market size or industry restrictions–we can invest in any company that holds great opportunity. Indeed, we hold some of the largest-capitalization companies in the U.S. as well as micro-caps (and everything in between) in our client portfolios. Many market sectors are represented.
12300 Old Tesson Road, Suite 100C
Saint Louis, MO 63128