Alphamont invests managed portfolios directly in equities of individual companies. Alphamont believes that constructing a portfolio of approximately 40 stocks provides the best way to achieve a diversified portfolio that can still outperform the overall market. This belief is based on our own investing experience, as well our portfolio theory calculations.
Alphamont’s managed portfolios have a strict limit requiring the market value of a position at the time of purchase to be less than 5% of the total market value of the portfolio. From our goal of 35-40 holdings, our goal is to have an average position size of approximately 2.5% (100%/40). However, position sizes within managed portfolios will vary in a 1-5% range based upon a combination of factors including, but not limited to; volatility, market capitalization, fundamentals, and technicals. Alphamont’s managed portfolios may also dollar cost average into a position with 1% increments over the course of days, weeks, or months.
Alphamont does not have hard industry concentration limits or targets. Depending on market prices and prevailing industry fundamentals, industry concentrations will deviate over time. We seek to avoid having industry concentrations of more than 20% in any single industry. We believe that keeping industry concentrations below 20% is key to maintaining a diversified portfolio.
Equal Weight Portfolio Variance with All Stocks Having Equal Variance and Correlation Coefficents of 0.25
Portfolio Variance Excel Source [Downloadable File]