To Outperform the Market,
You Must Be Different Than the Market.
Investment Methodology
Sheets Smith Investment Management brings a spectrum of investment solutions to fit the needs of a wide range of risk tolerances and investment objectives. No investment products are sold here, only management styles; meaning your interests are put first and tailored to your investment objectives.
The Dynamic Asset Allocation
Our forward-looking Dynamic Asset Allocation strategy adjusts resources among stocks, bonds, and cash equivalent investments based on their relative risk-adjusted value. Most of our clients allow asset allocations to range from 0-100% for all three asset classes. Combining sound stock selection with appropriate allocation adjustments to changing conditions, we maintain dynamic portfolios that are built on the fundamentals of preserving capital while earning competitive returns.
Equity Selection Process
Stock selection is determined by a number of quantitative screens and technical measures, the most important of these being the growth rate of earnings and the strength of earnings revisions. A database of more than 5,000 U.S. traded stocks is narrowed down to 300-500 names after the initial screening process. Technical analysis then provides a handful of names that are under accumulation, not extended and at proper buy points.
Fixed Income Selection
Fixed income allocations are mostly implemented through the use of bond ETFs for diversification and liquidity reasons within separately managed accounts. The use of ETFs also allows nimble and easy duration adjustments. The portfolios are limited to only investment grade bonds, and we do not use mortgage backed securities.
Use of Cash
Our use of the dynamic asset allocation process allows us to safeguard portfolios in times of distress and move to a larger cash position that typical money managers are accustomed to. There are also times when we simply cannot find stocks that meet our investment criteria. During those periods, we will wait, holding our cash until the odds are more in our favor for a successful investment.