E-Portfolio
Vision Advisors principal objective in its flagship Equity Portfolio is to provide returns from a diversified group of large-cap growth companies that have generally outpaced the S&P 500 Composite Stock Price Index over a broad market cycle. Vision Advisors strongly believes that a select number of quality stocks which fit the investment characteristics displayed by seasoned companies poised for further growth are worth owning. Accordingly, the equity portfolio will be primarily comprised of a diversified portfolio of large-cap stocks which exhibit a high level of financial strength coupled with a demonstrated record of substantial growth and with strong prospects for continued growth. Therefore, this portfolio may have less diversification at times and may be more exposed to sector trends than a more diversified portfolio. A modest sized account generally will incorporate fewer stocks and may be less diversified.
Vision Advisors' internal research efforts focus on identifying companies that have sustainable gross revenue (top-line) and earnings or net income (bottom-line) growth, competitive advantages and above-average returns on equity. Vision Advisors employs technical analytical screening methods to predict expected revenue and earnings over the next one to two years. Upon identifying a number of issuers, the selection is further narrowed by applying other Vision Advisors’ investment rules to predict price earnings ratios and evaluate future price prospects. Final winnowing of the portfolio is made through analysis of an issuer's quality of management, new product developments, potential for unabated growth, capitalization and other significant factors.
Securities in the Equity Portfolio may represent several sectors of the economy, but generally will not be concentrated in any one sector or constitute more than 15% in any one issuer. Securities are sold when they are deemed to have reached their maximum level of growth or to make room for securities with more attractive growth potential. Other selling considerations may be deceleration in sales or earnings growth, excessive competition, over-expansion or product pricing weakness.
Vision Advisors also believes that it makes sound economic sense to employ from time to time a strategy of writing covered call positions against some or all of the stocks in the Equity Portfolio. The primary purpose of option writing is to earn additional income through premiums received from the buyers of the call options. By monitoring the volatility, delta and time to expiration, Vision Advisors works to optimize the trade-off between premium income and the potential for future price appreciation. When options are employed, Vision Advisors anticipates that the benefits of premium income received will outweigh the limitation of gains by use of those option contracts. At the same time, the investor receives a measure of downside protection if the price of the stock declines. By means of this option writing program, Vision Advisors will attempt to enhance total returns in the portfolio by judiciously covering the options written and capturing the premium before the underlying stock price increases or decreases by more than the amount of the premium or by letting the options expire, worthless (thus keeping 100% of the premium), depending on market conditions. Further information about writing covered calls may be found here.
In addition to covered calls, Vision Advisors may, from time to time, purchase out-of-the-money put options to further add to the level of downside protection. The ratio of purchased put options may be less than the number of long shares of stock owned in the account. Please recognize that employing puts to help protect the stocks in an account is likely to temper total returns (due to the premium paid to purchase the put options), but does provide downside protection against declines in the underlying stocks.