Portafolio Capital Management offers several portfolio management styles to choose from.
The client must meet our firm’s minimum amount of $1million in liquid assets to invest alongside our management. For a full list of our portfolios and information about how we strategically build and manage investment accounts, please book an appointment by visiting our contact page.
Past performance is not indicative of future results. Please take a moment to read our legal disclosures here.
Tactical Equity Sector Rotational Strategy
Our proprietary Tactical Equity Sector Rotation portfolio takes advantage of industry-specific opportunities that management finds fit, while leaving the opportunity open to shift the portfolio overweight defensive when economic conditions inspire us to do so.
Sectors and industries are defined by the Global Industry Classification Standard (GICS®). The 11 sectors are: Financials, Industrials, Information Technology, Consumer Discretionary, Materials, Energy, Health Care, Telecom, Consumer Staples, Utilities, and Real Estate.
**Note that PCM excludes the Real Estate sector in building our Rotational Strategy model.
From these 10 sectors, we build a binary model which classifies the respective sector as either 1. Opportunistic or 2. Defensive. It’s important to note that sometimes companies in “defensive” sectors behave “opportunistic” and companies in “opportunistic” sectors behave “defensive”, regardless of economic conditions. This change in behavior is acknowledged by management as we analyze the state of the markets, observe the company prospects within a given sector, and shift the portfolios’ weightings. At inception, management will typically invest 75% of its securities in sectors PCM classifies as Opportunistic and 25% in securities it classifies as Defensive. Portfolio weightings may change as time progresses. Weightings may differ at inception if management feels compelled.
We look at monetary policy, monthly economic data, and company specific information as catalysts to buy into and sell out of positions in a portfolio. This portfolio employs an active management approach in an attempt to enhance returns. Active management may include aggressive strategies such as short-term trading. This portfolio will typically hold 30-36 positions at any given time.
Alpha Long-Term Growth Strategy
Management invests in companies that look to maximize long-term capital returns. Positions in the portfolio are amongst a list of companies we find with strong management and a competitive advantage in their respective industry. This style of management focuses on finding growth companies and investing in their business model and management team. This portfolio typically invests in 30-36 positions with an overweighting in consumer discretionary, biotech, tech, fintech, and other “high growth” industries. This portfolio employs a passive management approach.
Microeconomic & Macroeconomic Data in Focus
Specific measures of the economy serve as catalysts for us to take action on portfolio positioning and management. We’ve listed a few of the domestic measures we observe, on a monthly basis. These measures help management formulate a level of conviction when it comes to shifting a portfolio overweight or underweight on a specific sector or industry.
**Listed indicators below serve to assist clients in understanding how we manage capital at Portafolio Capital Management. While these are some indicators we may watch, at any given time, there may be others that are included, excluded, observed, or unobserved by management.
Leading & Lagging Indicators
Yield Curve
We maintain an outlook on an inversion of the yield curve. When short-term rates are higher than long-term rates, for a prolonged period of time, we often seen this as a sign of an upcoming recession. This can sometimes cause us to shift the allocation of our portfolio into overweighted “recessionary-resistant” positions.
Gross Domestic Product (GDP)
GDP is a measure of the total value of goods and services produced in a country and is considered a lagging indicator because it reflects past economic performance. We observe GDP data to measure not only the rate at which the economy is growing but also when we fall into recession.
Corporate Profits
Corporate profits are a lagging indicator that reflects the financial performance of businesses and can provide insights into past economic conditions. Observing corporate earnings is a vital part of our process in investment selection at PCM.
New Housing Starts
The number of new residential construction projects can indicate future economic growth and consumer confidence. When housing starts slow or stagnate, this could be a sign of a slowing housing market.
Interest Rates
Interest rates, particularly those set by the Federal Reserve, are a lagging indicator of economic growth as they reflect the cost of borrowing money and are based on past economic conditions. The fed has a dual-mandate in managing the economy: price stability and maximum employment. Keeping an eye on FED movements is vital to our understanding on the Federal Reserve’s monetary policy.
Building Permits
Similar to new housing starts, building permits can indicate future economic growth and construction activity (or) a slowing economy.
Unemployment Rate
The unemployment rate is a lagging indicator that reflects past changes in the labor market and overall economic conditions. With maximum employment being part of the Fed’s dual mandate, we observe labor data to better tell us where the economy is headed and predict how monetary policy will adhere.
Consumer Price Index (CPI)
The CPI measures changes in the prices of a basket of goods and services and is a lagging indicator of inflation and overall economic health.
Purchasing Managers' Index (PMI)
PMI measures the economic activity in the manufacturing sector and is considered a leading indicator of overall economic health.
Personal Consumption Expenditures (PCE)
is a key economic indicator that measures the value of goods and services purchased by consumers. It's often considered a more comprehensive measure of consumer spending compared to other indicators like the Consumer Price Index (CPI) because it includes a wider range of expenditures and adjusts for changes in consumer behavior and prices over time. PCE is closely monitored by policymakers and economists as it provides valuable insights into consumer behavior, inflation trends, and overall economic health.