Equity Selection - Fundamental analysis is an essential part of our equity selection process which begins with a quantitative screen for companies that have 10 consecutive years of dividend growth and a market capitalization greater than $2 billion. In addition, we prefer companies with less leverage or debt, high cash dividend coverage ratios, accelerating free cash flow and improving net margins. From here, a qualitative analysis is completed to identify companies that are leaders in their respective industries, have seasoned and effective managements and operate businesses that are essential to the daily functioning of the global economy. Finally, a valuation analysis is completed for each company in order to identify those companies with the greatest potential for price appreciation and total return.

In terms of a sell discipline, if a company fails to increase their dividend on an annual basis it is removed from the model portfolio. In addition, a company may be sold for any of the following reasons: valuation, fundamentals deteriorate, dividend growth slows or more attractive alternatives exist.

Equity Model Portfolio Construction - Once the approved list of companies is compiled, a model portfolio is constructed with the following constraints and/or limitations: Investment in any one security should not exceed 5% of the portfolio at market, industry concentrations should not exceed 25% at market and sector concentrations should not exceed 35% at market. A typical model portfolio will contain 30 to 35 companies.

Strategic Asset Allocation – Our approach to portfolio diversification is expanded beyond just the basic asset allocation of stocks bonds and cash. We believe clients benefit from holding a broad global basket of asset classes, among these may include developed foreign equities, small and mid-cap equities, energy related master limited partnerships, real estate securities and emerging market equities. These “satellite” or sub asset classes are blended with our core equity selections to provide clients with a truly global diversified portfolio.