Buckhead Capital’s Diversified Value equity strategy aims to provide clients better than market (S&P 500) returns, with lower volatility. The first part of that statement is pretty easy to understand, but what does lower volatility mean and why should anyone care?
Lower volatility simply means that the value of a stock portfolio will not go up and down as much as a portfolio invested in a comparable index. Lower volatility provides both psychological and financial benefits. Psychologically, a less volatile portfolio helps investors maintain their exposure over full market cycles to the growth that stocks provide. From a shorter-term financial perspective, a less volatile portfolio reduces the risk that a withdrawal from the portfolio will derail the achievement of long-term goals.
We have managed money in the Diversified Value strategy since 1997 and have achieved better than market returns with lower volatility over that time. Historically, our returns have lagged the S&P 500 in up markets (upside capture of 84% since inception), performed substantially better in down markets (downside capture of 59% since inception), and outperformed over the full market cycle.
The last year’s results (through June 30) illustrate our strategy’s efficacy in a microcosm. In the last six months of 2021, the S&P 500 returned 11.7% while the Diversified Value portfolio returned 10.9%. However, in the first six months of 2022, the S&P 500 lost 20.0% compared to a loss of 11.6% for Diversified Value. Over the entire year, the S&P lost 10.6% compared to a loss of 2.0% for Diversified Value.
If you would like to know more about how we achieve these results, please reach out to us. We’d be more than happy to have a conversation about our investment process and how it can benefit you.
Disclosures:
This presentation compares the returns of the Diversified Value Composite (gross of fees) and the S&P 500 Index for the peak to six-month periods ended December 31, 2021 and June 30, 2022, and the 12 month period ended June 30, 2022. The upside and downside capture percentages are the ratio of the Diversified Value return (gross of fees) to the return of the S&P 500. The references to the capture ratios since inception represent a comparison of the linked, annualized returns of the Diversified Value Composite (gross of fees) and the linked, annualized returns of the S&P 500 Index for the peak to trough downside half of the market cycle (8/2000 -9/2002, 10/2007 – 2/2009, 12/2019 – 3/2020, 12/2021 – 6/2022) and the trough to peak upside half market cycle (6/1997 – 8/2000, 9/2002 – 10/2007, 2/2009 – 12/2019, and 4/2019 – 12/2021). This information is deemed supplemental to the Diversified Value Composite presentation, which is available upon request. The Diversified Value Composite inception is 06/30/97.
Buckhead Capital Management, LLC is an independent registered investment adviser. The Diversified Value Composite consists of fully discretionary, fee‐paying accounts of at least $200,000 at inception that are managed in a focused value equity strategy and are benchmarked to the S&P 500. This strategy uses a screening process to generate investment prospects whose business fundamentals and valuation are assessed by the portfolio management team. Companies must trade at a discount to the team’s calculated value in order to be purchased. Composite portfolios will be fully invested with at least 90% of their net assets invested in 35‐50 U.S. traded mid and large capitalization stocks. Composite data is provided for informational purposes only. The returns of the Diversified Value composite are presented gross of fees, but reflect trading costs and include the reinvestment of all income. Past performance is not indicative of future results.
