Kanawha’s investment process is centered on each account, one client at a time. We customize each portfolio to reflect the client’s specific objectives, risk profile, time horizon, and tax considerations. However, we do so within a consistent and rigorous analytical framework. Portfolios are broadly diversified to provide the appropriate balance between risk and return. We utilize individual stocks to diversify portfolios across sectors and industries while incorporating exchange-traded funds and fixed income securities to provide exposure to additional asset classes.
Our equity approach focuses primarily on large-cap, established companies that offer a blend of growth and value characteristics. This Growth at a Reasonable Price approach seeks to provide a more steady and consistent performance over a market cycle. Our equity selection stems from a disciplined framework incorporating a focus on cash flow rather than simply relying on reported earnings. By focusing on cash flow, we aim to produce a more accurate diagnosis of a company’s ability to generate wealth for its shareholders. We also consider a company’s competitive position, quality of management, and the industry and sector outlook.
To complement our focus on individual stocks, we can further diversify portfolios to achieve pure asset class exposure by using exchange-traded funds. These are low cost, liquid funds that, like stocks, are traded on exchanges that offer continuous intraday pricing. Through tactical analysis, we are able to underweight or overweight exposure to these funds based on our expectations for the underlying asset class.
Our fixed income approach focuses on high quality taxable and tax-free debt securities. We position maturities to reflect a client’s time horizon as well as the firm’s outlook on interest rates and the economy.