Methodology
Equity Methodology
The investment strategy is to purchase equities having sustainable earnings growth at a reasonable price. The process begins with a quantitative screen of the universe which includes the S&P 500. We utilize a proprietary multi-factor model to rank companies based on a blend of the following characteristics: value, current and expected earning growth, and relative strength. In addition, we rank companies by an estimate revision and earnings surprise model. Our goal is to reduce the universe to those companies that have shown consistent earnings growth, are expected to do so in the future, and are performing well versus their peers while not overpaying for these traits.
The next step in our process involves qualitative evaluation of the companies that meet our screens. Here we are looking for items that financial statement data might miss or might not be able to distinguish. Examples include the evaluation of specific characteristics and cycles of a business, an industry or the economy, management quality, and/or financial statement integrity.
The last step includes tailoring the portfolio to manage and meet the client’s risk tolerance. Diversification of each portfolio can range from focused (30 to 50 securities) to broadly diversified (100+ securities).
Equity Security Selection
The equity selection process starts with a large universe and ends with a diversified, tailored portfolio.
Fixed Income Methodology
The primary mission of fixed income management at Trustmark Investment Advisors, Inc. is to achieve investment returns that fully compensate investors for a predetermined risk tolerance. We manage our fixed income objectives in a manner that generates a safe, reliable source of income relative to the prevailing market conditions. We also strive to maintain market comparable total returns, as most of our clients wish to achieve effective and rewarding diversification as part of the overall investment objective. We have been successful in meeting these requirements through the disciplined purchase and rotation of U.S. Government, Agency, mortgage-related, and high-quality corporate securities. Using a combination of our own internal analytical models and our own experience-based professional judgment, we ascertain those securities that may have potential for superior returns. We then carefully construct our bond portfolios in a manner that keeps aggregate market value volatility to acceptable levels and maintains a high degree of liquidity and versatility.
Over time, another important component of return is the compounding effect of reinvesting income. We use internal systems to monitor and control portfolio income so that any interest or principal payments are reinvested on a timely basis. Sweep systems are in place for end of day cash investment until a strategic investment is made.
Furthermore, the duration of the bond portfolio is controlled within an acceptable range of total price volatility and will reflect our current assessment of:
- The interest rate cycle.
- The economic cycle.
- Product and credit spreads.
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