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PORTFOLIO STYLES

Money management styles to match your financial goals

LTBC Capital Advisors LLC is dedicated to managing individual portfolios using a disciplined bottoms-up approach. We design portfolios to achieve competitive risk adjusted returns. Our investment strategies are founded on a philosophy of capital preservation, portfolio theory and company diversification. We manage a wide range of accounts that have varied investment objectives, income needs and risk tolerances. Before we begin to manage any account we review the client's overall financial picture: their age, future plans as it relates to their finances, income level, other assets or other sources of income and their expectations related to the assets being managed. We combine our investment expertise with your specific goals to develop an optimal strategy to achieve those objectives. Results are closely monitored and reviewed to adapt to changing market conditions. Your input is vital to the strategic process, both initially and with regard to changes in financial objectives or risk tolerance over time. Most importantly, we place your financial interests as our priority.

We pride ourselves on establishing:

  • Long-term personalized relationships built on trust and integrity
  • Customized strategies that are tailored to the client's specific objectives
  • A flexible approach based on market conditions and changing client needs

Superior discretionary portfolio management

Below are six basic types of accounts that range from the most conservative (all bonds) to the most aggressive (all small and mid cap stocks). Within each of these basic types of accounts there can be many different implementations that tailor specific types of securities to the needs and preferences of specific clients. For instance a balanced account could range from 10% to 90% in income securities and the remainder in equities. Each account, whether balanced or all equity, could have prescribed amounts of small, mid or large caps or a not so defined ratio of each.

  • All Bonds and Money Markets
  • All Income Securities
  • Mixture of Income Securities and Equities (Balanced Account)
  • All Large Cap Stocks
  • Mixture of Large, Mid & Small Caps
  • All Small and Mid Caps

All Highest Quality Bonds

These days there are only a handful of AAA corporate issuers and because of their heavy demand their yields spreads versus treasuries are near historic lows. Similarly long term treasuries are near historic low yields and offer very little value. Over the last few years we have found the most value in AAA rated callable Agency bonds. Here we can get higher than long term yields above treasuries without taking on undue risk of lower credit quality while keeping our duration relatively short.

Income Accounts

All income accounts combine the above with other securities that are a little lower on the credit quality scale but have a reasonable ability to hold their value while providing either a higher current yield, the possibility of capital appreciation or in some cases both. More often than not we purchase investment grade bonds but occasionally will purchase below investment grade or unrated bonds only when we believes we know and understand the issuer well enough to believe the bonds are safer than their rating may indicate or are an extremely good value relative to the perceived risk. Convertible bonds and convertible preferred stocks are a great way to generate income and provide some upside potential. Preferred stocks and convertibles can be especially good investments when they are bought at a discount to their redemption value. These are sometimes called busted converts which might have a 4% or 5% coupon, but when bought in the 80's or 90's (% of par) can have a double digit type yield to maturity. We might also hold a small percentage of common stocks (usually under 10%) that either have high yielding dividends or were received in an exchange from a convertible where we believe the common has a high likelihood of appreciating in the future.

Balanced Accounts

Balanced accounts typically are appropriate for investors that need some income from their account but also want to see the value of the portfolio appreciate over time. Typically an average balanced account is 60% equities and 40% fixed income or income securities. The actual allocation between equity and income is determined by the client´┐Żs particular parameters (risk tolerance; income and liquidity requirements; and tax considerations). Together, we reach consensus before implementing a customized strategy. After deciding the major asset allocation we then must decide the types of equities to hold i.e. a more conservative account might prefer only large caps that also pay dividends but a client with a longer term time horizon and a preference for appreciation might choose much larger percentages in small and mid caps to supplement their large cap holdings.

All Equity Accounts

As previously discussed in balanced accounts all equity accounts can be structured to incorporate any and all types of combinations as to the amount of large, mid and small caps an account should hold. Sometimes it is better to not have a rigidly defined amount such as 60/20/20 L/M/S but to think more in terms of ranges. Instead one might want 50-70/15-25/15-25 or something along those lines because too rigid a guideline might force certain decisions that might not be in the best interest of the account. An example might be selling off a portion of a small cap holding that still has good growth potential and paying high short term gains taxes just because we were over the amount allocated to small caps.


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