WIC uses four strategies spanning the risk spectrum to manage our clients’ assets. All strategies are researched and managed in-house. Our investment committee averages 23 years of portfolio construction experience, including two CFAs.
WIC’s portfolio managers and their families are invested in the same strategies as our clients; it should be no other way.
The WIC Fixed Income Strategy is designed for clients whose first priority is preservation of capital and who prefer reduced equity exposure. It is designed to provide a reliable income stream and reduced volatility, while capitalizing on corporate bond yields and minimizing realized losses.
We pay particular attention to the duration of our Fixed Income Strategy. The Strategy’s duration is generally lower than the Barclays Capital Aggregate Index, meaning the Strategy tends to experience less volatility as interest rates change. While maintaining a below average duration is a primary objective, we also aim to have a higher yield than the Barclays Capital Aggregate Index.
We employ our Fixed Income Strategy for clients with the following needs:
- Basic diversification
- Preservation of capital
- Short-term capital needs
- Defined longer-term capital needs
- Portfolio ballast during market volatility
- Returns slightly higher than inflation, with low volatility
The Managed Volatility and Income Strategy (MVIS) offers investors exposure to equity market returns and enhanced yield while hedging market volatility.
WIC’s Managed Volatility and Income Strategy maintains broad diversification by investing in 50+ U.S. traded stocks. No single company has more than a 2.25% weight in the portfolio, and the portfolio is diversified among sectors. As a way to reduce risk, we sell covered call options on every stock in the portfolio. The Strategy’s net exposure typically ranges from 55 –65%.
The portfolio has well-defined construction parameters, with fundamental analysis performed on each company. Equity selection focuses on historical dividend records and the probability of sustained and growing dividends.
We have two objectives:
(1) Lower volatility and reduced net stock market exposure achieved by selling covered calls on each holding
(2) Above-average portfolio cash flow provided by dividends and option premiums
Portfolio cash flow is the dominant source of return and is achieved by investing in relatively high-quality, high dividend-yielding equities and selling “out-of-the-money” covered call options against those equities.
The Managed Volatility and Income Strategy is a relatively defensive way to own equities and is a less complex strategy compared to alternative strategies such as hedge funds. This strategy is suitable as an equity component, a fixed income component, or a hedged strategy. It is used by foundations, endowments, family offices, corporations, pension funds, and high-net worth individuals.
For more information about this strategy, please read Alternative to Alternatives.
Willis Investment Counsel has managed its Core Equity Strategy for nearly 40 years. Our approach relies on fundamental, bottoms-up research to identify companies that we believe are sufficiently undervalued yet have acceptable risk profiles. The Strategy usually holds 35—50 broadly diversified, mid/large cap equities, with an average position size of 2—4%.
At least 75% of the portfolio contains basic companies that we believe will compound value over extended periods of time via strong internal growth rates. We will invest up to 25% in contrarian & deep cyclical companies if the risk/reward opportunity is extraordinary.
When considering companies, we actively screen for financial strength, sustained profitability, free cash flow durability, and competitive position in essential industries, with an emphasis on understandable businesses and risk-reflective capital appreciation potential.
While there are many paths to investment success, we believe our strategy of owning financially strong, market-leading, undervalued companies for long periods has and will produce successful outcomes for our clients.
Furthermore, our investment strategy is in alignment with our efforts to actively practice good investment behavior, which entails promoting patience throughout our investment process and practicing gradualism with regards to trading and long holding periods.
WIC’s Small Cap Value Strategy seeks long term growth of capital by investing in what we believe are the most mispriced areas of the stock market. The Strategy generally holds 20—30 companies, with an average position size of 3—5%. We target smaller companies (market caps) that often have minimal investment analyst coverage, little to no ETF representation, and high insider ownership.
When considering companies, we actively seek out financially strong companies who are market leaders and have a track record of positive earnings and cash flow. We use proprietary models to value these companies over long periods of time. We do not rely on one model but rather use multiple academically proven methods to triangulate a general value of a company.
We focus on companies that are understandable and in which we have conviction for their 5+ year path. This process allows us to employ patience and hold companies for long periods of time.
We aim to maintain a diversified portfolio through our understanding of the true economic drivers of each of our companies, while focusing on secular trends that have long term momentum.
There is no guarantee that these strategies will achieve their stated goals and they are subject to customary investment risks and uncertainties. There will be years of negative returns and loss of principal may occur. Past performance is not predictive of future results.