Our Core Growth Equity Portfolio is designed for investors seeking long-term growth of principal without regard for current income. Investors should be willing to accept volatility equal to or somewhat above the broader stock market in order to obtain opportunity for higher long-term returns.

History has shown that stock prices follow earnings over the long run. By investing in the stocks of companies with above-average earnings growth, we seek higher-than-average increases in their stock prices. This is the premise of growth stock investing. While this approach is simple in theory, it requires diligent research and discipline to be successful in practice.

Our Core Growth Team focuses on companies with sustainable earnings growth at appropriate valuations. To increase our success at identifying companies with sustainable earnings growth, we focus on operating cash flow (cash earnings) and return on invested capital (or how much a company produces in earnings for every dollar it invests in its business). Our research shows that companies that grow their cash earnings faster than their reported accounting earnings have typically exhibited more reliable earnings growth. Further, high returns on invested capital make it easier for a company to finance future growth.

Once we have identified companies with sustainable earnings growth, we focus on valuation. Here we want to make sure the price that we pay for a stock is appropriate relative to the company’s historical valuation, current earnings growth, and other investments.

As with all of our core equity portfolios, we control portfolio risk through broad diversification across economic sectors.