Colonial maintains a disciplined "top down" investment philosophy that identifies economic, business, demographic, technological and public policy trends that may impact long-term investments. We then determine which industries will be positively impacted due to their leverage to a specific trend. After thorough analysis of these companies, we create a focus list of company stocks from which we make equity investments.
Each of the companies on our focus list has unique or proprietary competitive advantages. These dominant companies normally have lower unit cost, more liquidity, and the management strengths necessary to remain dominant. These firms have demonstrated reliable earnings and dividend growth, which are powerful positive forces that can lead to long-term capital appreciation. Colonial has a strong bias toward companies with the capabilities to compete globally.
Time Horizon - Long Term Patience and Short Term Volatility
Time is an investor's best ally, and experience has convinced us that a patient, steady approach produces consistent results. Long-term positions in leading companies allow us not to be overly concerned with the market's short-term volatility. We concentrate on investment options with a three- to five-year time horizon, allowing for long-term investment returns that are not swayed by impulse reactions or temporary changes in market conditions.
Fixed Income Investing
We take a conservative approach to fixed income investing, and we strive to avoid losses while providing a consistent return. We consider the structure of specific investments, including security, guarantees, maturity, and yield. Through this analysis, we seek to identify issues that possess appropriate risk/return characteristics.
When assembling a fixed income portfolio, we attempt to maximize investment flexibility by utilizing a "modified laddering" strategy. Laddering a portfolio provides diversification of maturities and limits sensitivity to changes in interest rates. To modify a traditional laddered portfolio, we may overweight a certain maturity based on our opinion of future rate movements. This strategy seeks to minimize exposure to significant changes in interest rates by having portions of the portfolio maturing at regular intervals.