Investments

Capital Builder Strategy

Jul 15, 2025

A Tax-Efficient Blueprint for Quality Growth

Capital Builder is for investors who want a tax-efficient growth strategy without the stomach-churning volatility that may come with those more aggressive strategies. The strategy pairs a disciplined quality-growth process with deliberate tax management, seeking to outperform the S&P 500 on a risk-adjusted basis across full market cycles—typically five to ten years—while cushioning the downside in difficult markets like 2022 or Q1 2025.

Who Should Consider Capital Builder?

The portfolio was engineered for two types of investors:

High-net-worth retirees who no longer need income from their taxable accounts and prefer to defer gains as long as possible
Younger investors who are looking for a lower-volatility growth strategy

Both of these investor groups value individual stock ownership and a smoother ride than many growth strategies deliver.

The M-V-P Framework

Our security selection relies on the same playbook that many great investors like Warren Buffett and the late Charlie Munger have used to build wealth over time:

“M” for Moat

We buy businesses that dominate their niches and reinvest at returns on invested capital (ROIC) that significantly exceed their cost of capital. These companies have a large economic “moat” that allows them to earn more money on reinvested dollars than their competitors and the average company.

“V” for Value

Quality growth stocks often trade at higher multiples than the broader market, as they should, but we want to avoid bubbles that these growth names have experienced in the past. We triangulate intrinsic value using our proprietary blend of valuation models. We use these models to identify quality businesses that may be trading at less than their intrinsic value or find areas in the portfolio that we should take profits in.
“P” for Predictability

Capital Builder seeks predictable companies that consistently grow their earnings year after year. We think that’s a sign of a wonderful company with an advantage that may be hard to match; those are the kinds of companies we believe can generate long-term performance with below-average risk.

Why Capital Builder?

In an environment where growth strategies are extremely exposed to a handful of mega-cap stocks, Capital Builder seeks to offer a different path: own durable franchises, pay a fair price, then stand aside and let those companies do the heavy lifting of compounding wealth. For clients seeking a tax-efficient growth strategy without as much volatility, Capital Builder could potentially be appropriate as a core strategy or an excellent complement to Cornerstone for a portion of your assets.

This article was featured in the Summer 2025 edition of the Rising Dividend Report.

Read more articles from this issue here.

This has been provided for informational purposes only and is not intended as legal or investment advice or a recommendation of any particular security or strategy. The investment strategy and themes discussed herein may be unsuitable for investors depending on their specific investment objectives and financial situation. Information obtained from third-party sources is believed to be reliable though its accuracy is not guaranteed. Opinions expressed in this commentary reflect subjective judgments of the author based on conditions at the time of publication and are subject to change without notice. Past performance is not indicative of future results.

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