Investment Approach

Already Open When the Nikkei’s Closing

At 6am, we’re already studying the closing market in the Far East, looking for early indicators which might benefit clients. More than once we’ve found them.

It’s just one of several reference points used in our Top-Down Investment Approach to managing financial assets.  Rather than placing undue reliance on technical analysis alone, we begin with a review of major trends, the strength of the economy, and the direction of interest rates.  We end with assets strategically allocated for the individual client’s needs.

Top-Down Investment Approach

Equity Investments
In the Top-Down Investment Approach, we isolate key industries expected to benefit from changes in trends and the economy.  Next, we evaluate and choose individual firms within these industries based on underlying stock value.  Criteria include:  cash flow, market presence, demonstrated financial capabilities, pricing flexibility and worldwide presence.  Large computer databases and stock selection screens contribute an understanding of the universe of available companies, but rarely factor into the ultimate decision.

Wedgewood views equity selections with a long-term investment horizon of three to five years.  Within the timeframe, however, price targets of six to 18 months may often be used.

Mutual Fund Investments
Following the Top-Down Investment Approach, client portfolios are invested using a multi-style, multi-manager strategy.  A multi-style strategy invests across different investment styles with the market.  For example, an allocation to “stocks” would include large cap, mid cap and small cap stock funds diversified across both growth and value disciplines to diversify the portfolio.

Multiple managers are then selected to bring independent thought and research to the portfolio.  Wedgewood’s strategy allows us to select managers based solely on their merit.

This diversified investment strategy is allocated according to clients’ specific goals and objectives.

Fixed Income Investments
Following the same investment approach, Wedgewood first evaluates the prospects for inflation and direction of interest rates.  We then evaluate the options: money market instruments, U.S. Government and agency securities, corporate and municipal bonds, mortgage-backed securities and preferred stocks.  Selections are based on an analysis of the yield curve, the duration of the fixed income security, and key risks such as interest, credit and option risk.

The investor’s individual tax situation, income objectives and risk tolerance help dictate the final fixed income strategies, markets and investments.