Equity Strategies

Core Income Portfolio

Executive Summary 

The InSight Core Income Portfolio is designed for clients with an intermediate to near term view of equity investments, and require more income at present. The constituents of this portfolio reflect current Income production.  

The portfolio is created from the universe of the S&P 500 and other developed international individual names. The portfolio is more exposed to market sectors that have long term track records of higher current income ratios and return of capital for investors. This portfolio is traditionally overweight Technology, Consumer Cyclical, Communication Services, and Healthcare, and underweight Defensive, Cyclical, Energy, and Basic Materials.

The portfolio consists of both ETFs (Exchange Traded Funds) and Individual Stocks with the purpose of seeking out a return inline with the market. The leading indicators for success in Core Equity are as such:

  • A sound balance sheet with revenues that support the return of capital, and growth.
  • Growing Revenues and YoY balance sheet expansion.
  • Capital efficiency ratios are competitive to the broader market including a high and growing ROE metric and Return of Capital.
  • Inclusion of individual names that help improve either the Dividend or reduce volatility.
  • The Core Equity portfolio looks to combine the returns of the broader market, with near term mispricing opportunities.

Who is right for the Core Equity Portfolio?

Investors who have gone through the InSight-Full® planning process and as a result have qualified for this portfolio in their opportunity set. As a result of their personal appetite for risk, long term time horizon, and overall appropriateness of this investment philosophy. They are generally: 

  • Willing to accept volatility in line with the market
  • Committed to the long term horizon of the business cycle
  • Understanding of the risk-reward trade-off
  • Prefer a balance of current income and growth, with at or below market risk

Cost Considerations:

The investments in the Core Income Portfolio are largely from low-cost index ETFs and individual stocks and have a weighted cost on assets of below 0.15%. There are no other management fees, kickbacks, or concessions the investor pays as part of the cost of the portfolio.

Tax Considerations:

The Core Equity Portfolio is suitable for inclusion in a Roth, IRA, or other qualified accounts.

The use of ETFs and Individual Stocks provides a low and controllable profile of exposures to taxation that we can manage in-house at InSight. Additionally, we feel this portfolio is acceptable to incorporate in taxable accounts and preferable to the use of mutual funds and other pass-through entities.

InSight uses tax loss harvesting to mitigate client taxation over time.

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