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Our Process

Our process begins with a broad overview of the domestic and global economic outlook. We utilize internal and third-party research to shape our views on a variety of macroeconomic factors including GDP growth, inflation, interest rates, monetary and fiscal policies. This helps us to determine which sectors and foreign investments to overweight in the portfolios. Our top-down research process also guides our fixed income investment process.

Next, we screen a universe of large, mostly familiar companies to find those that meet our criteria of quality and growth at a reasonable valuation. We apply bottoms-up research to this group using a blend of fundamental, technical, and quantitative methods in the security selection process. We rely on our own internal research, in addition to employing third party research services to supplement our analysis.

Finally, we put together equity portfolios using the stocks of companies that we find to be the best relative value. To achieve proper diversification, we strike a balance between too few equities, which leaves the portfolios open to individual stock risk, and too many equities which tends to dampen the potential outperformance of portfolios. In addition, these positions typically cover all 11 S&P sectors using our top down analysis to determine sector weightings.

Our fixed income portfolios emphasize short to intermediate duration investment grade bonds. For individual fixed income positions in client portfolios, we only buy investment grade bonds. We utilize ETFs and mutual funds to diversify portfolios and enhance expected returns. These broadly diversified portfolios may contain bonds of less than investment grade rating. Our research process guides us in deciding what duration to target and credit quality to emphasize in client portfolios, and which bond sectors should be favored or avoided.

Individual portfolios at New Potomac Partners are not 100% uniform. We focus on developing portfolios to meet each client’s needs. A client’s age, income needs, capital distribution requirements and type of account (i.e. taxable, tax deferred, trust, individual etc.) all factor into portfolio construction. We also incorporate any unique circumstances a client wishes us to consider.