Asset Allocation Portfolios
Asset allocation is the implementation of an investment strategy that attempts to balance risk versus reward by adjusting the percentage of each asset in an investment portfolio according to the investor's risk tolerance, goals and investment time frame.
The KG&L Capital Management asset allocation portfolio’s include individual stocks, bonds, REIT’s, and sector specific ETF’s. The goal of these strategies is to deliver portfolio performance and risk management based on client specific investment objectives.
Separately Managed Accounts
Separately Managed Accounts (SMAs) allow us the ability to work with investors in a broader, non-strategy specific context, thus customized to their own personal situation. The structure allows us to leverage our investment expertise for a client’s entire portfolio, while also offering them the transparency and custodial security that they seek.
The investment process screens the largest 2000 publicly traded equities (typically greater than $4 billion in market capitalization) with a minimum 1.5% dividend yield. We seek to identify leading business franchises with significant market share, global brands, strong competitive advantages and sustainable recurring cash flows. The company’s dividend policy is a key consideration; management commitment to the dividend policy and the firm’s overall ability to maintain or grow the dividend. The portfolio holds 25-30 equities and are diversified among sectors. Equities tend to be equally weighted in the portfolio. Average beta value is less than or equal to 1. Equities may be sold when they reach price target, fail to realize earnings or dividend growth target, exhibit deteriorating fundamentals or a reduction in dividend. Use of target stops and/or trailing stops may be utilized.
Dividend Yield Plus
The portfolio contains a passively managed equity componenet with an actively managed derivatives overlay. The equity component is comprised of 20-30 large / mega capitalization equities (typically greater than $4 billion in market capitalization). Equities typically provide annual dividend greater than 1.5% and beta exposure of less than 1. A derivatives overlay for hedging and income production further reduces beta exposure. This strategy may include bear call spreads, bull put spreads, covered calls, cash secured equity puts and protective puts. Returns are primarily driven by stock and sector selection based upon fundamental analysis, technical analysis, spot and strike prices, time to expiration, implied volatility and interest rates. Targeted usage of derivatives is to provide income of 1X + dividend yield and to preserve appreciation potential of the underlying equity. Option strike prices are typically near the underlying equity price at time of sale and have an expiration of typically three months or less (option delta approximately .25 - .40 / .15 - .25 spread).
Concentrated Position Management
Concentrated equity positions create a unique opportunity requiring active management of both risk and reward. Tax implications, dividend yield (if present) and non-diversification risk must be measured against macro and micro economic conditions. Our team will customize an overlay of derivative strategies to accomplish alternative income generation and / or hedging. Employed strategies may include spreads, covered calls, protective puts and collars. Strategy implementation is dependent upon fundamental and technical analysis, spot and strike prices, time to expiration, implied volatility and expected ex dividend / earnings dates.
KG&L Intelligent Portfolios
The KG&L Capital Management fixed income solutions include both taxable and tax-exempt strategies that serve client’s needs across the maturity spectrum. We construct tailored solutions for clients based on their unique risk tolerance and income requirements. Our fixed income investment process is rooted in the implementation of a top-down analytical approach focused on actively managing the portfolio duration risk, yield curve positioning, market segment allocation, and active security selection. The Fixed Income strategy is managed to deliver efficient cash flows, with an emphasis on minimizing downside risk in all market environments while maintaining a high level of liquidity.