Our Philosophy & Approach
Our investment process begins with the Trust Investment Committee (TIC), which is a group of nine investment professionals. The Committee is responsible for setting investment policy, maintaining our approved equity list, and identifying new potentially attractive investment opportunities for clients. Portfolios are developed based on our client’s long-term goals, cash needs and tolerance for risk. We customize portfolios for our clients, and do not use a one size fits all approach to investment management.
There is a selection process for purchasing individual equity and fixed income securities. Individual stocks are selected based on factors including sustainable competitive advantages, superior financial strength, high quality management and potential for future growth. The Trust Company of Vermont uses various equity research services, as well as our own independent thinking to make investment decisions in our stock portfolios.
Individual bonds are selected based on the credit quality of the issuer and the tax bracket of the client. Because bonds typically represent the low-risk segment of a portfolio, we want to minimize the potential for permanent loss of capital. Thus, our bond investments consist primarily of U.S. Treasury or U.S. Government Agency bonds and municipal or corporate bonds with a minimum credit rating of “A”.
We believe that investment success is more a matter of time than timing. We do not act on short-term ideas or themes but instead focus on investments that we believe will increase in value over time. We are more concerned with performance over the next 3 to 5 years, as opposed to the next 3 months. Consequently, the turnover ratio in a Trust Company of Vermont portfolio has averaged roughly 10-15% annually.
We believe that diversification is a key risk management tool, and we seek to avoid letting one company represent too large a portion of a portfolio or to let any one industry or economic sector become significantly overweight relative to the market benchmark.