PENCE Human Behavior Core Strategy Portfolio UIT

The Human Behavior Strategy focuses on identifying companies that derive a significant portion of their revenue from direct sales to U.S. consumers, addressing various levels of human needs. By targeting these companies, we aim to leverage their potential for capturing upside gains while managing downside risks, thereby addressing investor concerns about volatility.

Portfolio Focus
This strategy includes companies with robust fundamentals and relatively low volatility, providing a balance of stability during economic downturns and profitability during growth periods. To maintain focus on consumer-driven businesses, we exclude highly sensitive sectors such as materials and energy, as well as industrials that lack direct consumer interaction.

What We Consider
Our portfolio is built around mapping Personal Consumption Expenditure (PCE) to Maslow’s hierarchy of needs, offering insights into consumer spending behavior. PCE, as a key measure of consumer activity, helps us track how and where U.S. consumers are directing their spending, adapting to shifts over time. This approach enables us to understand and capture trends in consumer psychology while also considering investor concerns.

The trust is structured as a Regulated Investment Company (RIC).

Industry Breakdown

As of 10/10/2022 and may vary thereafter.

Key points to consider

The portfolio tries to map Personal Consumption Expenditure (“PCE”) into Maslow’s hierarchy of needs.

PCE is the primary measure of consumer spending and provides clues on what U.S. consumers buy and how consumer behavior changes over time

As of September 2019, PCE stood at $14.7 trillion, larger than China and growing at a steady pace, averaging 4.4% over the past 5 years.

The portfolio aims to capture both the psychology of consumer and the fear of investor.

Maslow’s hierarchy of needs helps us understand consumer psychology.

Stocks upside/downside capture helps us avoid investor’s fear of volatility.

Companies with strong fundamentals and relatively lower levels of volatility can have potential to be more stable in downturns and more profitable in periods of growth.

The portfolio selects companies that directly serve U.S. consumers while acknowledging investor fear of volatility by selecting companies with (historically) limited downside.

How to invest

Pence Capital Management develops investment strategies for distributors and model portfolios for advisors. To invest in Pence Capital Management Strategies, please contact your broker or advisor.

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