Portfolio Types
Five Primary Types of Portfolios
Delta Advisory Group manages assets under five primary portfolio shells. The following is a list of the types and a brief description of their characteristics:
Income portfolio policies arise from the traditional notion that only income can be spent and capital gains must be reinvested. Portfolios resulting from this notion can range from safe, high yields in bonds and money market instruments (though with some inflation risk) to a portfolio having some high-yielding stocks (such as utilities) and real estate (such as real estate investment trusts), in which the potential risk (dividends or other payment cuts) and reward (growth in income) can be greater.
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Portfolio Creation
The "Planet and Satellite" approach
The portfolio construction process at Delta Advisory Group is defined by what is termed the "Planet and Satellite" approach to asset management. This particular style is a hybrid approach which takes aspects of the traditional passive investment management (the planet) and combines it with a more active style (the satellites).
The Planet
The "Planet" portion of the portfolio refers to the long-term cornerstone of the portfolio. This particular area of the portfolio will consist of mostly established core holdings, whether equity or debt instruments. We look to this particular part of our portfolio as the unchanging quality in the market. We anticipate holding onto this core group of stock well into the future and feel that the securities used in this particular portion of the portfolio come from the highest quality companies in the world.
There are five broad criteria that we use when qualifying our core securities. Please keep in mind that a company meeting all of these criteria is not in any way assured of being used as a core position. These are simply criteria that give us a foundation, or starting point, from which to pick the cream for our portfolios.
The criteria are:
The size of the float available to the public is our first criteria. We attempt to ensure that a sufficient amount of stock is available to investors and that the stock is not likely to be manipulated by one or two institutions. In most cases, this will remove small-cap issues from consideration. However, we can gain small-cap exposure thru the active portion of the portfolio.
The Satellites
Think of this portion of the portfolio as the more active portion of the investment. This particular section of the portfolio allows us to use our day to day knowledge of the market and proprietary techniques to add value to the portfolio.
There are three primary ways we add value to the investment portfolio:
This is the decision to move money in or out of the market in an attempt to enhance returns or limit our downside risk. Understand, we are not a market timing firm nor do we attempt to second guess what we believe are fairly efficient markets. However, under certain economic and market conditions, we may make a decision to have more or less cash in the portfolios.