Core Wealth Steward Model

Below is an overview of the objectives and general construction of each of our Wealth Steward Portfolios:

SmithCap 1:   Income Generation

The primary objective within this strategy is to generate a consistent income stream through a conservative allocation across income producing asset classes with little emphasis on capital growth.  The portfolio is implemented into these asset classes through the use of mutual funds, closed-end funds and individual securities, and diversified across multiple styles of government bonds, corporate bonds, real estate securities, and dividend-paying stocks.

SmithCap 2:   Income & Moderate Growth

The objective of this strategy is to create long-term capital growth through income generation and capital appreciation.  We pursue this objective through a moderate allocation across income-producing and conservative growth-oriented asset classes.

The income portion of the portfolio is structured similarly to SmithCap 1.  The growth oriented component is implemented into conservative growth asset classes primarily through the use of mutual funds, closed-end funds and ETFs.  Investments are diversified across multiple styles of equity securities, including value-oriented stocks and hybrid equity securities such as convertible bonds.  Additionally, as a means of mitigating risk typically associated with pure equity positions, we employ the use of balanced and market neutral funds, which typically capture a decent percentage of the total return of the equity market with less volatility.  We occasionally utilize funds that are inversely correlated to the broad stock market, which act as a hedge against market volatility and employ tactical allocation strategies.

SmithCap 3:   Capital Growth

The objective of this strategy is to create long-term capital growth through capital appreciation with a moderate amount of portfolio income.  While this strategy will tend to exhibit increased volatility, we strive to minimize the overall risk exposure through the implementation of a balanced allocation and active portfolio management.

The SmithCap 3 portfolio structure parallels that of the growth component of SmithCap 2 but with larger weightings in the equity sub-asset classes.  Additionally, we dynamically and tactically manage the SmithCap 3 model portfolio to take advantage of intermediate-term market cycles or occasional price inefficiencies.  We typically carve out a moderate percentage of the portfolio to be dedicated to more tactical allocation strategies, which we implement dynamically through the use of market index and sector ETFs.  This will also typically include exposure to ETFs that provide inverse exposure to certain parts of the market if our Tactical Allocation Decision Process indicates greater risk on the horizon.