Growth & income portfolio
OBJECTIVE: GENERATE INCOME AND EQUITY GROWTH IN BOTH BULL AND BEAR MARKETS
Overview - The Turner Capital Investments Growth & Income portfolio is designed to generate a high level of dividend income and capital appreciation using an actively-managed, market directional investment strategy. The strategy will hold individual equities, ETFs, cash or a combination of the three as determined by the strategy manager.
Since 1929, the historical annual return for stocks with no dividends has been approximately 5.8%. On the other hand, the historical annual return for stocks during that same period of time, has been 10.1%; more than 170% better than stocks with no dividends.
We look for companies with rising dividends. Over the past four decades, stocks with rising dividends outperformed every other type of stock; more than 2.7 times the return of fixed dividend stocks; more than 30 times better than stocks with no dividends; and, more than 1,500 times better than stocks that cut dividends.
Research shows that if $100,000 was invested 42 years ago in stocks with no dividends that investment would be worth approximately $303,000 today. If that same $100,000 had been invested in stocks with fixed dividends it would have grown to a very impressive $2,387,000. But, if that $100,000 investment had been used to buy only stocks with rising dividends, the investment would have grown to a whopping $6,300,000. This is why one of our primary investment goals for our clients that follow the Growth and Income strategy is stocks with rising dividends.
Management Approach - Focusing on larger, stronger, publicly-traded US companies that have a record of consistently paying dividends, the management approach for this investment strategy is to be long and fully invested if the market (S&P 500) is trending higher and well above its 200-day moving average; in cash when the market is trading inside its "Neutral Zone", as defined by the 200-day moving average plus/minus one standard deviation of normal volatility; and, holding 70% cash and 30% in inverse ETFs when the market is trending lower and well below its 200-day moving average. Specifically, the process works as follows:
- When the S&P 500 is above its 200-day moving average plus one standard deviation of normal volatility and trending higher, the objective is to have client accounts fully invested in up to 40 different dividend-paying, fundamentally strong, stocks and ETFs.
- When the S&P 500 is above its 200-day moving average, plus one standard deviation of normal volatility, and trending lower, the objective is to discontinue adding new positions to client portfolios and hold cash as positions stop out.
- When the S&P 500 is trading within a band defined as the 200-day moving average plus or minus one standard deviation of normal volatility, the objective is to tighten stops, take profits and move to cash.
- When the S&P 500 is trading below the 200-day moving average plus one standard deviation of normal volatility and trending lower, the objective is to have not more than 30% of client accounts invested in 1x major index inverse ETFs and the balance of the client portfolios in cash.
- When the S&P 500 is below its 200-day moving average plus one standard deviation of normal volatility, and trending higher, the objective is to discontinue adding new inverse ETFs to client portfolios and hold cash as positions stop out.
Holdings Profile - This strategy focuses on up-trending stocks of US companies with market caps of $8 billion or higher that have a track-record of paying dividends, as the primary target holding in bull-market cycles. In bear-market cycles, the focus is to hold 70% or more of the portfolio in cash or cash equivalents and up to 30% of the net asset value of the portfolio in 1x inverse ETFs. In all cases, the manager's discretion applies.
Portfolio Structure - When fully invested, client portfolios following this strategy will generally hold up to 40 different equities with no more than 30% of the net asset value of client portfolios invested in any one Sector and no more than 20% of the client portfolios invested in any one Industry.
Minimum Account Size - $50,000
Fee and Fee Structure - With a few exceptions (see Management Fee Exceptions, below), Clients pay an "all inclusive" management fee to Turner Capital Investments, LLC (TCI). This management fee covers all management services and trade commission fees. This means TCI clients do not pay a commission to the broker for trades made in their portfolio(s). TCI management fees range from 3% to 1% of the month-ending net asset value of client account(s). The percentage rate is based, in part, on the aggregated total of an individual client's accounts being managed by TCI (see "Family Discount", below). One-twelfth of the fee is deducted from the client's account(s) monthly. Clients have the option to pay management fees outside their account(s) rather than have the fee automatically deducted from their account(s).
Family Discount - When calculating the management fee percentage, TCI aggregates all client accounts including client's family accounts, such that the aggregate amount of the client plus family accounts are used to get the lowest possible management fee.
Management Fee Exceptions - In those cases where either governmental rules or broker-dealer rules prohibit TCI from paying for trade commissions for the client, the management fee will be reduced by 10 basis points. For example, a 3% rate will be reduced to 2.9% and a 1% rate will be reduced to 0.9%.
Cash Strategy for Client Accounts – When client accounts are not fully invested in individual equities, the balance is typically held in cash or cash equivalents. It is the goal of the Manager to keep client accounts fully invested, but depending on market conditions and risk assessment, the Manager may choose to have client accounts in cash.