We construct our portfolio with the following guidelines: 45-60 issues, sector weight +/- 10% of the MSCI EAFE Index, country weight +/- 15% of the index, maximum position size 6%. With respect to the dividend yield of our portfolio, we target the 80th percentile of dividend yield of the EAFE Index, which is approximately 3.2% on a trailing basis and 3.5% prospectively. Under these guidelines, we construct a diversified portfolio, on a sector basis, from our "Core" candidate list which contains 80-100 issuers. To manage risk, the firm uses two 3rd party optimization programs to measure the portfolio's factor risks and expected information ratio. The portfolio managers use the outputs of these programs as a guide when determining security and sector weights within the overall portfolio construction process. These outputs also highlight unintended risks in the portfolio. Risk is measured relative to the EAFE Index.

Broadly speaking, we characterize our portfolio as a collection of “quality businesses, at good prices”. The portfolio trades at a meaningful discount to the MSCI EAFE index in terms of EV/ Cash Flow, P/E and Price/Book, but also has a CFROI at or slightly above the index. Our forecasted EPS and DPS growth rate is 8% and 7%, respectively. The portfolio is large capitalization focused, with some exposure to the $5-10 billion market capitalization space as well.