Robin A. Pope

Boys Arnold & Co. (BAC) conducts in-house research in support of their growth investment strategy and security selection process. Each client's financial objectives are considered when establishing asset allocation guidelines that will govern the firm's investment mix of assets. For equities, stocks must meet established standards at three levels of evaluation. First, companies are screened for market cap, historical operating performance and balance sheet soundness. Next, each stock is evaluated for growth of profits and trend in the level of profitability, measured by CFROI. The final phase of analysis focuses on the company's products, management, and the perceived value at its current price. This evaluation process applies to both buy and sell decisions. When managing fixed-income, non-taxable portfolios are managed on a total return approach. While guarding against loss of principal, BAC adds value through active management of maturity, sector weightings and individual issues. These portfolios are heavily weighted in government bonds and high-quality corporate obligations and are diversified across maturities, industries and issues. Taxable portfolios are managed with an emphasis on current income and minimization of taxes. BAC attempts to control risk by diversifying issues and maturities, by emphasizing excellent quality and by continuously monitoring the credit quality of all holdings. Although the presence of capital gains taxes leads to less frequent trading in taxable accounts, they initiate trades to adjust average maturity and to capitalize on occasional inefficiencies in the market.