Core Compounders: Equity & Bond Portfolio

The Core Equity Compounders own 20-25 stocks in a portfolio. Positions are weighted and tailored – bespoke -- to fit each individual client, spread across 6 to 7 industries essential to the economy. They are industry leaders with dominant market share, plus innovative markers, indicative of a durable competitive advantage. Many provide dividends. Most have been in business 30+ years. They’ve weathered the storms of tough times and have prospered in good times.

Key to our selection process is that they partake in rising markets while buffering drawdowns in falling markets. Hence, smoother higher returns.

Each stock is a tax-efficient, Long-Horizon ‘buy ‘n hold’ of high-quality / medium-volatility / low-turnover business, purchased at a reasonable if not bargain price. Typified by sustainable long-term growth + steady earnings (as opposed to hyper-growth fueled by debt). The usual holding period lasts 3+ years… Should its story change, however, we will trim or sell it (e.g., competitive pressure; management issues; regulatory burden).

Based on the client’s goals, a Bond component may be added to the Compounders in a portfolio. They include investment-grade Corporate Bonds, U.S. Gov’t Bonds / Treasuries, High Yield, and interest-bearing cash. Adding Bonds usually provides risk-adjusted returns that generate income via cash distributions to support a client’s lifestyle or current needs.