Vista Investment Management employs a Core Equity investment strategy for its model portfolio, using primarily individual securities. The primary objective is growth of capital with a moderate level of risk. The model portfolio is highly diversified and has exposure to virtually all major equity sectors. Market timing does not play a significant role in Vista's strategy. Because this strategy is highly diversified, it may be appropriate for investors seeking one primary equities portfolio. To the extent possible, Vista will attempt to minimize taxable events.
Vista employs a Core Equity approach in an attempt to achieve long-term returns in excess of the S&P 500 Index, while maintaining a level of risk that is equal to or less than this Index. There are many types of risk , including company risk, market risk, sector risk, geographic risk, economic risk, and interest rate risk. By maintaining a high degree of diversification, Vista attempts to limit exposure to any one type of risk. Vista’s equity investment process relies heavily on the analysis of fundamental data to identify attractive investment opportunities.
Vista may take short positions if an arbitrage opportunity arises.
Utilizing analytical software, thousands of companies are screened and scored. The manager performs in-depth analysis on companies that score the highest. Investments are made in companies that appear to be undervalued in relation to their earnings, cash flows and growth rates. In addition, other factors such as management strength, financial condition, profitability, and consistency of performance are considered. Vista generally invests in individual common stocks, ADRs, ETFs and closed-end funds. On occasion, leveraged ETFs may be used.
Vista seeks exposure to all major industry sectors, growth and value stocks, large and small companies and international markets. Although exposure may vary, large U.S. companies will typically comprise approximately 40% of the portfolio, mid and small companies will also represent about 40%, and international (including emerging markets) will equal about 20% of the portfolio. The portfolio will typically hold 25 to 30 positions. Rebalancing is done on an ongoing basis. Generally, no individual company position will exceed 5% of the portfolio. However, a fund position might exceed the 5% threshold. Typical turnover should be approximately 25% per year.
When long-term fundamentals negatively change, or a price target is reached, the investment is sold. To help make this determination, Vista utilizes various analyses to evaluate all current investments. Each investment receives a score based on numerous factors. When the score drops below a certain threshold, it is evaluated for potential sale from the portfolio.