Heritage Capital’s Capital Appreciation Investment Strategies

Investment portfolios with a Capital Appreciation objective involve a fair degree of risk in order to achieve higher long-term total returns on investment. Growth of capital is a clear priority over minimizing portfolio volatility. Investors with a Capital Appreciation objective understand, and are comfortable with the fact that short-term volatility is a price to be paid for higher long-term returns. Investors who choose Capital Appreciation as an objective generally have a long-term time horizon, e.g. 10 years or more, and/or they wish to take advantage of the higher returns potentially offered by more volatile asset classes.

Diversified Growth Program

Heritage Capital’s Diversified Growth is a top down, risk managed index strategy with the ability to take long, short and neutral positions in the Dow Jones Industrials, S&P 500, S&P 400, Russell 2000 and NASDAQ 100 as expressed by exchange traded funds or index mutual funds that track the various indices. Two distinct and independent models are used in this strategy; one that focuses on the long-term, while the other looks at the intermediate-term. Both models have trend following as well as mean reversion rules to account for the different market environments.

The Diversified Growth Program focuses primarily on capital appreciation with capital preservation coming on an opportunistic basis.

Relative Strength Sector Program

Heritage Capital’s Relative Strength Sector Program employs a proprietary computer model to select one to four top performing U.S. market sectors, including cash, that indicators predict offer the highest potential reward over the intermediate-term. This actively managed strategy is then implemented using exchange traded sector funds and the Rydex sector funds as well as sector funds within variable annuities from Jefferson National and Nationwide’s MarketFlex.

Positions are modified and rebalanced as often as weekly to meet our goal of investing assets in the top performing sectors. Although this is a trend-following strategy, the risk management component uses mean reversion, looking at the overall market, and begins to impact investment decisions when any two of our three market models go negative.

The Relative Strength Sector Program focuses primarily on capital appreciation unless our stock market models call for preservation to be blended in.

Unloved Gems Program

Heritage Capital’s Unloved Gems Program is Heritage’s only individual stock strategy. From an unconstrained, go anywhere universe, the strategy has a core of high quality, well-recognized companies that have either fallen on hard times or where short-term sentiment has become unusually negative. The rest of the portfolio is filled with special situation companies which may or may not be recognized and offer some unique potential. Underlying research includes fundamental analysis, strong technical set ups and quantitative output. The strategy is actively managed, can be hedged as well as carry varying degrees of cash. Concentrated sector allocations are also permitted. Average position size is 2.5%.

Unloved Gems focuses primarily on capital appreciation with some aggressive growth.

Past performance is not indicative of future returns. All investment approaches have the potential for loss as well as gain.