We employ a two-step investment process. First we develop an Asset Allocation policy to determine the percentage exposure to equity, debt and money market securities that is appropriate for each investor's risk tolerance, tax bracket, and time horizon. Once these guidelines are established, we turn our attention to individual security selection. Our basic philosophy is to invest in quality, overlooked securities at value prices and to hold them for the long term. We are especially wary of investment fads, concentrating instead on underlying economic and business fundamentals.

As many investors realized in the last few years, exposure to different industry groups can be a significant factor in investment performance. Live Oak Investment Management uses the S&P 500 as a benchmark to assess risk. While we are conscious of the sector allocations of the benchmark, we do not manage precisely to them. We will selectively over- or underweight sectors as opportunities arise.