We are excited to share a variety of insights about our differentiated approach to equity investing in this newly launched blog. Our goal is to increase your understanding of our long-term, compounding-focused approach that is relatively less correlated to traditional benchmarks, as well as some of the specific things we try to do each day in our attempt to steadily grow our client’s assets over market cycles.
- Enabling equity investors to more effectively compound their capital across market cycles is at the heart of our approach. Our clients understand that staying invested in a strategy that is structurally designed to provide reduced downside and market-like upside is the key to long-term compounding of assets.
- Our investment process revolves around using our expertise to invest in companies which provide essential services for our modern economy, often in regulated industries with extremely high barriers to entry, and the ability to consistently grow earnings and dividends over extended periods of time.
- Since 1978, our firm has been dedicated to this approach. We remain focused on a small number of industry sectors because we believe our advantage comes from being specialists.
Through this lens, it is easily observed that the longer an investor remains invested, the higher the probability of attaining the full benefits of compounding. Similarly, the risk of capital impairment declines in relation to time spent in the market. For example, Reaves’ Long Term Value1 investment strategy generated positive returns in 99.8% of rolling 5-year time periods2 since 1978. That’s 444 out of 445 rolling 5-year time periods. The strategy has generated annualized returns, net of fees, of 12.8% and outperformed the S&P 500 Index3 with a lower level of risk.
We trust this blog will provide additional insights into our process and our people and help you gain the confidence to use Reaves for a portion of your equity allocations.
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Thank you for your interest and support.
The Investment Team at Reaves Asset Management
1Reaves performance data is the Reaves Long Term Value ERISA Composite and, unless otherwise noted, all data is net of fees. The Reaves ERISA Composite reflects the dollar-weighted return of all corporate ERISA pension accounts with assets of at least $1,000,000 under management for all periods presented (the minimum was $900,000 during the period 08/31/10-06/22/12). Returns are time-weighted and include the reinvestment of all dividends and other earnings, net of commissions. The ERISA Composite does not reflect all of Reaves’ assets under management. Reaves’ ERISA Composite ended on 12/20/19.
Reaves’ Long Term Value Strategy seeks a high risk-adjusted total return. The strategy tends to be invested in relatively larger companies with strong balance sheets, good cash flow and a history of dividend growth. Core positions are accumulated in financially strong, high-quality companies and generally have the following characteristics: strong management, above industry-average growth rates, large/mid-market capitalization and low price-earnings multiples.
2Rolling returns reflect the cumulative return on a continuously held investment over a number of consecutive periods, calculated monthly.
3The S&P 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The typical Reaves portfolio includes a significant percentage of assets that are also found in the S&P 500. However, Reaves’ portfolios are far less diversified, resulting in higher sector concentrations than found in the broad-based S&P 500 Index.
Net performance reflects the deduction of advisory fees which are described in detail in Reaves’ Form ADV Part 2A. Please contact us at email@example.com to obtain Form ADV Part 2A and for more information about Reaves Asset Management.