What is Active Financial Management?
Each portfolio is tailor designed to fit your individual risk tolerance and all accounts are fully segregated. We prefer to build portfolios of individual companies for clients, rather than using mutual funds or pooled accounts with high Management Expense Ratios (MER) that may affect your annual returns. Individual equities allow for flexibility in investment styles, which allows for quicker response time to market changes.
Generally speaking, we tend to focus on 10 to 15 stocks for the equity portion of the clients accounts. We believe concentrated portfolios help allow for better returns with little to no dead weight being carried just for the sake of diversification. We generally do not allow any one position to grow to more than 10% of the client’s account at any one time. Diversification amongst sectors, as well as individual stocks, is important; although we can focus on current market trends in our sector allocations.
While we are not market timers, we definitely believe that markets have cycles and are prepared to follow current trends both domestically and globally when deciding our portfolio allocations.
We primarily focus on growth at a reasonable price. We base that on the free cash flow relative to the enterprise value of the business compared to others in their peer group.