Tactical Equity Income

Strategy Objective

The Tactical Equity Income Strategy seeks income through yield and capital appreciation primarily from the tactical and unconstrained investment in risk-appropriate equities. As with all L&S tactical long/cash strategies, we protect capital in riskier markets by moving from equities up to 100% cash.

The Tactical Equity Income Strategy consists of a blend of 30-40 dividend-paying stocks and/or alternatives such as Master Limited Partnerships (MLPs) and Real Estate Investment Trusts (REITs). The primary focus is on large-cap U.S. equities, but it may also invest in foreign securities using American Depository Receipts (“ADRs”). Equities are chosen based on economic cycle, market sector, and fundamentals, with an emphasis on above-average earnings, revenue, and cash flow projections for the next 12 months.

Clients may choose between 2 versions of the Tactical Equity Income Strategy: one that invests in MLPs directly and another that avoids MLPs, gaining exposure instead through exchange traded funds (ETFs).


Core Client

The core client for this strategy would be a risk-intolerant client seeking primarily income with a secondary emphasis on capital growth.


Strategy Highlights

  • Tactical all-cap core, domestic and international (ADRs)
  • Invests primarily in individual equities, with a primary focus on stocks with a strong dividend yield
  • May seek income from alternative investments such as MLPs, REITs, or commodity ETFs when appropriate
  • Can be concentrated, including up to 100% cash (Treasury bills or U.S. government money market funds)

Key Benefits of All L&S Strategies

  • Active long/cash allocation. We aim to maximize returns in low-risk markets by investing in what we believe to be promising equities and preserve capital in riskier climates by moving at any time up to 100% cash.
  • Disciplined, data-driven risk management. We make tactical decisions based on rigorous economic data tracking and top-down macroeconomic analysis.
  • Unconstrained approach. We don’t limit ourselves to a single style box or market capitalization. We’re free to pursue what we believe to be the best opportunities across the entire stock universe.
  • NO leverage, options, shorting, or currency hedging, reducing complexity and fat-tail risk.
  • Less volatility and downside risk. Designed in an effort to reduce volatility and downside risk in comparison to traditional buy-and-hold strategies.