Investment Process
Macro View
Our macro view plays a very important role in our investment process. We believe
the financial landscape has changed, that market volatility will remain higher than
normal for the next 4-5 years, and equity markets will continue to be challenging.
We manage strategies that we believe can capitalize on this changing economic climate.
Focusing on Income & Protection
Given the current market environment, we believe investors should focus on income-oriented
strategies that provide enhanced yield and downside protection. We have managed
an enhanced income (covered call) strategy since 2002 that is well suited for today´s
uncertain markets. Unlike most equity strategies, which rely on price appreciation
for most of their return, our covered call strategy seeks to "lock in" a significant
return from the beginning by emphasizing income (dividends and call premiums) over
growth. The result is a larger percentage of current year cash flow, which provides
additional yield and downside protection. Our dual objective in this strategy is
to produce high income (typically 6-8%) as well as additional upside potential of
10+%
Making The Uncertain More certain
- Historically, income has comprised a larger percentage of total return than price
appreciation
- During the credit boom, this relationship reversed itself as investors focused more
on price appreciation
- Our strategies seek to "recreate" the historical relationship between
income and total return
Equity Investment Process
The Van Hulzen process leverages two unique sources of intellectual capital:
- Fundamental analytics: The HOLT™ framework enables us to distill away accounting
distortions and identify the companies that truly create wealth over time
- Risk analytics: Fibonacci analytics help us identify characteristics of price trends
(over distance and time) in order to establish key support levels and “stress test”
our watch list
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Fixed Income Investment Process
We use two unique lenses for assessing credit quality:
- Credit Sights: Named Credit Magazine’s “Best Independent Credit Research” for 2008.
Objective analysis of default risk, credit ratings, credit spreads & term structure.
- HOLT™: The HOLT framework gives us insights into a company’s balance sheet
strength, management quality, and history of value creation
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Copyright © 2011 Van Hulzen Asset Management.
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Note: HOLT is a trademark of Credit Suisse Securities
