An Overview of our Process & Strategies
For every new relationship, SSG Executive Advisory Group will build a comprehensive financial plan. Plan development requires mutual adhesion to due diligence and qualifying and quantifying the family’s financial needs and goals. As a product of the plan, our group will develop an investment program defining the initial asset allocation, investment process, risk management, and communication and review strategy. We create tailored investment strategies and manage them on a discretionary basis:
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The Global Macro flagship strategy is based upon Relative Strength and Momentum Investing. Strategy analytics are actively followed by evaluating the relative strength of the five major asset classes (Domestic Equity, International Equity, Fixed Income, Commodities and Currencies) and identifying the two leaders. Subsequently, each asset class is measured against Cash identifying periods of “defensive posture” (i.e., 2008, 2001). As a result, the strategy has a strict risk management bias providing opportunity to be more aggressively invested (focused on Equity or Commodities) or be quite conservative (can focus on Fixed Income and/or Cash). The strategy is comprised of exchange traded funds, providing sector or country specific risk, and does not take individual equity risk.
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The Global Macro – Balanced Strategy is the same as the Global Macro flagship strategy with the exception of a 30% carve-out for Fixed Income. We believe this carve-out logically decreases the market risk the strategy can be exposed to, thus decreasing volatility. Of the $250 million we manage between both portfolios, approximately 90% is in this portfolio (as of 7.1.20).
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The Core Growth Strategy is designed to produce long-term growth without regard for current income. The strategy consists of 25 predominately large capitalization equities. The strategy seeks broad diversification across most major economic sectors. A top-down investment approach to these broad sectors is taken to determine the desired sector exposure of the strategy. A bottom-up approach to stock selection is applied thereafter. Due to the limited number of equity positions and growth bias of the selected stocks, the strategy is expected to have volatility equal to or somewhat greater than the broader U.S. Equity Market.
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The Equity Income Strategy is designed to produce long-term total return, by seeking to combine current and growing dividends with appreciating share prices. Our goal is for this strategy’s dividend yield to exceed the dividend yield of the S&P 500. There is no assurance this will occur.
The strategy consists of 20 predominantly Large Capitalization stocks.
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The Equity Income Plus Strategy is designed to produce long-term total return, by seeking to combine current and growing dividends with appreciating share prices. Our goal is for this strategy’s dividend yield to exceed the dividend yield of the S&P 500. There is no assurance this will occur.
The strategy consists of up to 28 individual stocks, the majority of which are Large Capitalization companies that currently pay dividends.
In tax-qualified accounts (IRAs, etc.) additional exposure may be pursued in higher yielding securities from areas of the market often associated with higher dividend yields; master limited partnerships, real estate investment trusts, business development companies and higher yielding C-corporations.
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Seeks to take advantage of income in all market environments while focusing on preservation. The strategy remains 100% invested while attempting to capitalize on opportunistic yield plays. The strategy has a separately managed mutual fund allocation and rotates within the Fixed Income sector based on Relative Strength.
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For true fixed income exposure, SSG Executive Advisory Group builds and maintains both Municipal and Corporate bond strategies constructed on an individualized basis. Clients ultimately own the underlying positions.
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For clients who desire even greater risk/return potential, we will build and maintain individualized equity strategies that can be self-directed or co-managed with an SSG Executive Group partner.
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For qualified investors, we will introduce alternative investments made available by Raymond James.
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SSG Executive Advisory Group defines risk as the amount and the probability or possibility of incurring a meaningful loss (of capital) or a series of losses. There are different forms of risk – some that are unavoidable when investing, and others that are avoidable or controllable. Maintaining a strict risk management strategy, we aim to appreciate risk, reduce exposure to controllable and avoidable risk, and ultimately utilize risk prudently to gain from the potential reward opportunity.
Our investment strategy
Our investment strategy is supported by the study performed by the University of Chicago, The Latent Statistical Structure of Security Price Changes (1964), indicating 80% of the risk in any particular security is related to the market or sector. As a result, we take a “top-down” approach when evaluating the market. Once the overall stance of the market is established, we move to individual sector evaluation. Through continuous monitoring of each position for signs of impending change in the trend or relative strength, we attempt to enhance return opportunities while reducing controllable risk.
The top-down relative strength evaluation performed by our team aims to remain invested in what we believe are the strongest performing asset classes at all times. Evaluating the characteristics of each asset class against cash, portfolios can ultimately allocate to an aggressive or conservative stance. Further, sector relative strength is performed daily to evaluate potential opportunities and potential adjustments which we believe may require reallocation to alternative investments. The goal is to take advantage of major themes in market and sector leadership and avoid major losses.
When major asset class adjustment (market level) or sector rotation (sector level) changes occur, we perform a portfolio rebalancing with the goal of capturing realized performance and reinvesting in potentially underperforming but still favored investments.
With respect to individual equity investments, when market conditions warrant (overbought conditions), the team may recommend hedging strategies such as stop-loss orders. These strategies are designed to increase realized performance and allow for additional growth potential, while attempting to reduce downside exposure. Initial positions are considered with a minimum reward-to-risk ratio of 2 to 1.
Lastly, if an investment decision fails as a result of underperformance or relative strength indicates better potential opportunity elsewhere, positions will be closed without emotion.
There is no assurance any investment strategy will be successful. Investing involves risk including the possible loss of capital. The process of rebalancing may result in tax consequences. Asset allocation and diversification do not guarantee a profit nor protect against a loss. Dividends are not guaranteed and are subject to fluctuation. Investing in international securities involves additional risks such as currency fluctuations, differing financial accounting standards, and possible political and economic instability. These risks are greater in emerging markets. Commodities are volatile investments and should only form a small part of a diversified portfolio. There may be sharp price fluctuations even during periods when prices overall are rising. The market value of fixed income securities may be affected by several risks including interest rate risk, default or credit risk, and liquidity risk.
Alternative investments involve specific risks that may be greater than those associated with traditional investments and may be offered only to clients who meet specific suitability requirements, including minimum net worth tests. You should consider the special risks with alternative investments including limited liquidity, tax considerations, incentive fee structures, potentially speculative investment strategies, and different regulatory and reporting requirements. You should only invest in hedge funds, managed futures, structured products, commodities, real estate or other similar strategies if you do not require a liquid investment and can bear the risk of substantial losses. There can be no assurance that any investment will meet its performance objectives or that substantial losses will be avoided.
MLP distributions are not guaranteed. The actual amount of cash distributions may fluctuate and will depend on the future operating performance. Increasing interest rates could have an adverse effect on MLP unit prices as alternative yields become more attractive. While interest on municipal bonds is generally exempt from federal income tax, it may be subject to the federal alternative minimum tax, or state or local taxes. Profits and losses on federally tax-exempt bonds may be subject to capital gains tax treatment. In addition, certain municipal bonds (such as Build America Bonds) are issued without a federal tax exemption, which subjects the related interest income to federal income tax.
The value of the REITs and the ability of the REITs to distribute income may be adversely affected by several factors, including rising interest rates, changes in the national, state and local economic climate and real-estate conditions, perceptions of prospective tenants of the safety, convenience and attractiveness of the properties, the ability of the owner to provide adequate management, maintenance and insurance, the cost of complying with the Americans with Disabilities Act, increased competition from new properties, the impact of present or future environmental legislation and compliance with environmental laws, changes in real estate taxes and other operating expenses, adverse changes in governmental rule and fiscal policies, adverse changes in zoning laws, and other factors beyond the control of the issuers of the REITs.
Business Development Companies (BDCs) expect to pay significant fees, including incentive fees that are based upon performance, and such fees may offset all or a significant portion of a BDC’s profits. BDCs will be subject to limitations on the types of investments it can make. Investors will be exposed to significant market, credit and liquidity risks. BDCs may make loans with a high degree of credit risk and engage in leverage and other investment practices that are extremely speculative and involve a high degree of risk. Such practices may increase the volatility of performance and the risk of investment loss, including the loss of the entire amount that is invested. BDCs may invest in instruments that may be highly illiquid and extremely difficult to value. BDCs may involve complex tax and legal structures and accordingly are only suitable for sophisticated investors. You are urged to consult with your own tax, accounting and legal advisers regarding any investment in a BDC. BDCs are highly regulated investment vehicles, and are not appropriate for all investors.
Investors should consider the investment objectives, risks, and charges and expenses of Exchange-Traded Funds (ETFs) and Mutual Funds carefully before investing. The prospectus contains this and other information about ETFs and Mutual Funds. The prospectus is available from the SSG Executive Advisory Group and should be read carefully before investing.
The S&P 500 is an unmanaged index of 500 widely held stocks. An investment cannot be made directly in the index.
