Vinoy Capital Investment Process

Vinoy Capital uses a unique and flexible investment process which actively allocates client accounts into a customized mix of twelve distinct, globally diversified investment strategies. We use a mixture of these twelve strategies in varying percentages to make up the five primary Vinoy Investment allocations which are named: 1. Preservation; 2. Conservative; 3. Moderate; 4.Assertive; 5. Aggressive.

Inside of each of the twelve strategies, our firm selects mutual funds whose managers have shown the ability to consistently outperform their peer groups, their appropriate market indices, and to provide their clients with superior performance in a variety of market environments. We then closely monitor these holdings and constantly make adjustments as market conditions warrant. While our process is built with the objective of maximizing performance, our true goal is to achieve that performance using the minimum levels of risk and volatility. As part of our investment process, each of our clients completes a scientifically-based investment volatility analysis. When used in conjunction with a personal interview, this analysis helps us to develop a portfolio which reflects the client’s psychological feelings toward risk and return in addition to addressing their financial needs for income and capital appreciation. We then develop a plan for each client to invest their accounts into one of our five allocations in order to achieve an overall portfolio that is consistent with the client’s needs and comfort levels.  

Below is further detail on the twelve globally diversified strategies that we use to construct our client portfolios. We believe that these broad strategies encompass virtually every possible global endeavor to achieve a return on invested capital of either income and/or of capital appreciation.

Please note that all strategies involve the risk of potential loss. This material is for client or prospective client use only, and it is not to be duplicated or distributed in any format without prior written consent from Vinoy Capital, LLC.

A. Hybrid Strategies

A1. World Allocation Strategies encompass mutual funds that purchase a combination of equities and bonds both in the U.S. and around the world that the fund managers believe will provide superior performance while using diversification to diminish risks. Historically, these funds achieve roughly 50% of their potential from interest or dividend income, and 50% of their potential from capital appreciation.

A2. Hedging, Hybrid, & Absolute Return Strategies encompass mutual funds that use a wide variety of philosophies in order to reduce volatility, such as balancing long positions and short positions in securities, and balancing bond holdings with contracts in the futures, options, swaps and derivatives markets, as well as using convertible bonds; strategies that the fund managers believe will result in superior risk control and superior risk adjusted performance. Historically, these funds achieve roughly 50% of their potential from interest or dividend income, and 50% of their potential from capital appreciation.

A3. U.S. Allocation Strategies encompass mutual funds that purchase a combination of equities and bonds primarily from United States issuers that the fund managers believe will provide superior performance while using diversification to diminish risks. Historically, these funds achieve roughly 50% of their potential from Interest or dividend income, and 50% of their potential from capital appreciation.

B. Alternative Strategies

B1. Real Estate Strategies encompass mutual funds that buy real estate investment trusts, real estate securities, and stocks of homebuilders and building supply companies, both in the U.S. and around the world. Historically, these funds achieve roughly 25% of their potential from interest or dividend income, and 75% of their potential from capital appreciation.

B2. Special Opportunity Strategies encompass mutual funds that we feel are best taking advantage of the current trends taking hold in the investment community worldwide; whether through broad themes, or through specific regions, countries, or industries. Historically, these funds achieve roughly 0% of their potential from dividend income, and 100% of their potential from capital appreciation.

B3. Natural Resource & Commodity Strategies encompass mutual funds investing in the actual raw materials as well as the companies who mine, harvest, or refine those materials, and futures contracts based on those materials all around the world. Examples would be companies involved in generating traditional and alternative energy, agricultural commodities, precious and industrial metals, water, forest products, and precious stones for industrial and commercial use. Historically, these funds achieve roughly 25% of their potential from dividend income, and 75% of their potential from capital appreciation.

C. Equity Strategies

C1. Value Management Style Strategies encompass mutual funds owning U.S. and worldwide equities that the fund manager believes will meet targets for stable or increasing dividend income and/or are currently undervalued in price and so will achieve capital appreciation as the markets recognize the true value of these companies.  Historically, value funds achieve roughly 50% of their potential from dividend income, and 50% of their potential from capital appreciation.

C2. Blend Management Style Strategies encompass mutual funds owning U.S. and worldwide equities that the fund manager believes exhibit characteristics of both value and growth philosophies, and/or may be specific to either style. Historically, blend funds achieve roughly 25% of their potential from dividend income, and 75% of their potential from capital appreciation.

C3. Growth Management Style Strategies encompass mutual funds owning U.S. and worldwide equities that the fund manager believes will increase analytical factors such as sales growth and earnings growth faster than the rest of the market and therefore achieve greater capital appreciation. Historically, growth funds achieve roughly 0% of their potential from dividend income, and 100% of their potential from capital appreciation.

D. Bond Strategies

D1. High Yield Bonds encompass mutual funds owning U.S. and worldwide corporate and municipal bonds where the fund manager believes that the issuer will make payments of a higher interest rate that compensates for the risks of being of a lower credit quality. Historically, high yield and high income funds achieve roughly 75% of their potential from interest or dividend income, and 25% of their potential from capital appreciation.

D2. World Markets Bond & Currency Strategies encompass mutual funds owning worldwide corporate and government bonds where the fund manager believes that the issuer will make interest payments commiserate with higher or lower credit quality risks. The mutual fund managers may choose to hedge or not to hedge the fluctuations in currencies depending on their analysis of market conditions. Historically, international and global income funds achieve roughly 100% of their potential from interest or dividend income and from currency fluctuation, and 0% of their potential from capital appreciation.

D3. Investment Grade Bond and Miscellaneous Income Strategies encompass mutual funds owning U.S. income paying securities where the fund manager believes that the issuer will make interest payments commiserate with higher or lower credit quality risks. This strategy includes multi-sector bonds, multi-term bonds, interest paying preferred stock, interest paying contingent capital stock, floating rate bonds, treasury inflation protected securities (TIPS), and U.S. Government bonds, notes and bills. Historically, these income paying securities achieve roughly 100% of their potential from dividend income, and 0% of their potential from capital appreciation.