Strategic Partner Managed Accounts

Strategies We Believe You Can Utilize With Confidence

PENCE CHOKE POINT STRATEGY


Thematic, research-driven approach to investing in "knowable" transformative trends.


PENCE Capital Management

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PENCE Capital Management's founding principles bring together the study of human behavior and economic analysis. The investment team is comprised of professionals with diverse perspectives and credentials as economists, experts in behavioral finance, psychology specialists and former military leaders.

The company was founded by E. Dryden Pence III, whose unique background combines more than 30 years of financial industry experience as a Harvard-educated economist with service as a U.S. Army Colonel specializing in intelligence, special operations, and psychological warfare.

For more information, visit www.pencecapital.com.


Investment Objective & Principal Strategy

The PENCE Choke Point Strategy seeks to provide long-term capital growth by investing in a diversified portfolio of U.S. companies, global and thematic exchange-traded products*, and foreign equities. The strategy may opportunistically invest up to 10% of assets in fixed income ETFs.

PCM focuses on identifying transformative trends that have the potential to shape industries, economies, and consumer behavior.  Stock selection is then guided by analyzing which companies they believe are best positioned to benefit from these long-term shifts.

The Strategy’s benchmark is 90% S&P 500 Index and 10% Bloomberg U.S. Aggregate Bond Index.


Investment Process

The investment process is rooted in identifying Big Knowable Themes, which PCM defines as transformative trends or shifts that have broad, lasting impacts on industries, economies, and consumer behavior.  Themes are identified by analyzing patterns and data and range from disruptive technological innovation to evolving consumer behavior.

Once a theme is identified, the team determines companies that are positioned at critical points within the supply chain, referred to as Choke Points. These companies typically play an essential role in connecting demand with satisfaction and may benefit from growing adoption of products, services, or technologies linked to the broader trend. The Pence Choke Point portfolio specifically targets companies with robust financial health, innovative prowess, and sustainable competitive advantages.

The portfolio is typically comprised of 30 to 50 individual equity holdings plus select ETFs and ETNs. Individual equity holdings must be greater than $10B in market capitalization for purchase. Fixed income ETFs are selected for their income generation potential; they are U.S.-based and diversified globally with a minimum of $500M in fund assets.

CONTACT US
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Portfolio Facts
Advisor: PENCE Capital Management LLC
Strategy Inception:   9/1/2018
Benchmark:   90% S&P 500 Index & 10% Bloomberg U.S. Aggregate Bond Index
Objective:  

Capital Appreciation 

* Exchange-traded funds (ETFs) and exchange-traded notes (ETNs).

Investment returns and principal value will fluctuate and there can be no assurance that the strategy’s objective will be achieved. Refer to Pence Capital Management LLC’s ADV and strategy fact card for full details regarding the strategy, objectives, fees, risks and additional details about the advisor and strategy. The results and portfolios for individual portfolios may vary.

AAM acts as a third-party marketing agent for the Manager and does not act as an investment advisor to the strategy referenced above. 

The S&P 500 Index is a capitalization-weighted index that measures the performance of 500 large capitalization domestic stocks representing all major industries.  The S&P 500 Index is the most appropriate benchmark to best reflect broad market performance.  

The Bloomberg U.S. Aggregate Bond Index represents securities that are investment grade, taxable, and dollar denominated. The index covers the U.S. investment grade fixed rate bond market, with index components for government and corporate securities, mortgage pass-through securities, and asset-backed securities.

Principal Risks:  Investing involves risk, including the possible loss of principal. Principal risks associated with this strategy include, but are not limited to, equity market risk, interest rate risk, credit risk, management risk, company-specific risk, and risks related to recent market events. Equity investments may experience volatility due to changes in market conditions, economic factors, or deterioration in the financial condition of issuers. Small- and mid-capitalization companies may involve greater volatility and risk than larger, more established companies. Growth stocks may be more volatile than value stocks. International investments involve additional risks, including currency fluctuations, political and economic instability, differences in accounting standards, reduced liquidity, and varying regulatory environments. Emerging markets may present heightened risks due to less developed legal and regulatory systems and greater market volatility. Investment strategies such as asset allocation, diversification, and rebalancing do not ensure a profit or protect against loss in declining markets.

Fixed income investments are subject to interest rate risk, credit risk, prepayment risk, and duration risk. Interest rate risk refers to the potential decline in bond values due to rising interest rates. Credit risk is the possibility that an issuer may be unable to meet its payment obligations. Prepayment risk arises when borrowers repay obligations earlier than expected. Duration measures the sensitivity of a bond's price to interest rate changes. International investments involve additional risks, including currency fluctuations, political and economic instability, differences in accounting standards, reduced liquidity, and varying regulatory environments.

CRN: 2026-1002-13835 R Link 12085 & 12009