Investment Philosophy & Risk Management
Curran Investment Management's institutional equity portfolios seek to generate returns above their respective benchmark Russell equity indices over a full market cycle with less risk. This is accomplished by purchasing and owning the stocks of high-quality companies within the appropriate market capitalization ranges with the intention of holding them for the long term. There are different set ranges for the number of stocks held in each Curran portfolio, please see the Institutional Fact Sheets below. Each market-cap-specific portfolio is designed to deliver superior downside protection while fully participating in market rallies. The All Cap Equity portfolio invests in stocks with superior financials and rapid earnings growth which have the greatest stock price momentum.
For all four market-cap specific portfolios, focus is placed on companies that meet high quality standards criteria in earnings growth, return on equity, balance sheet strength, earnings retention, and possess a minimum number of years of public financial data (the latter varies by the target market cap range of the portfolio). The three market-cap specific portfolios can best be described as “core” style, but as they emphasize those sectors that demonstrate a history of consistent growth, the weights reflect Curran's modest growth tilt.
The investment approach is fundamental after a proprietary, multi-factor front-end analysis is used to narrow a starting universe of stocks. In the long run, stock prices are most correlated to the fundamentals and profit growth of the underlying company. This has been the conclusion of many academic studies over time. Companies with stronger financials, especially those with robust or improving balance sheets, offer the best opportunity at the lowest relative risk to deliver ongoing growth in earnings. The philosophy and approach of all Curran portfolios are unchanged from their inceptions.
Risk management is accomplished through the use of portfolio construction control parameters. Portfolios are diversified among most sectors, emphasizing those sectors that have demonstrated a history of consistent growth. The maximum allocation to any one sector is the greater of 30% or 1.5 times the benchmark sector weight. The minimum sector allocation is half (0.5 times) of the benchmark sector weight in the large sectors, and zero in the smaller sectors.
The weights of single stock positions are capped at various maximum percentages of the portfolios. The strategies that have the lowest number of holdings have the highest allowed individual position sizes in percentage terms (see links to portfolio fact sheets below). Curran does not look to time the market, and portfolio turnover is relatively low in the 3 market-cap-specific portfolios. Portfolios remains fully invested at all times, with the cash position never exceeding 5%. As measured by standard deviation, the three market-cap specific portfolios have been successful in risk mitigation as they have experienced lower volatility (less risk) than their respective benchmark indices over most time periods since inception.