At Eagle Capital Management, LLC, we realize that we are not just money managers, but also risk managers. Therefore, we set out to manage risk in a variety of ways; we summarize them as:
Strategically, we meet with the client to establish long term asset allocation targets with accompanying allowable ranges within which we may comfortably operate. This accounts for a large portion of total portfolio risk.
Functionally, we generally construct equity accounts using a number of Exchange Traded Funds for diversification and up to 30 common stocks of companies that we believe exhibit solid fundamentals and growth characteristics. The individual common stock portion of our portfolios will contain stocks we classify as dividend growth, industry leaders and New Era companies. Fixed Income accounts are invested in high-quality, limited-maturity securities solely. We combine these strategies to create balanced portfolios.
Tactically, we employ a proprietary Risk Monitor to establish sell targets at the security level. Targets are reset daily and evaluated intensely each Monday. We realize, however, that this business is both an art and a science. Therefore, once a “sell” target is reached (the science part), we begin evaluating the true market-related or firm-related reasons for the stock price to have reached the then-current level (the art part). In addition to providing greater diversification, the use of Exchange Traded Funds give us the ability to raise cash and thus reduce market exposure with a handful of trades.
Operationally, we believe we have both the discipline and experience to execute sales in a timely fashion in order to exit markets, lower risk and reduce portfolio volatility.