Fixed Income Management Approach

We don’t take short cuts. We invest in individual bonds and avoid bond funds because bond funds never mature. By doing this, we believe Sound Income Strategies take control of these risks, where a mutual fund can’t. Bond mutual funds present the investor with uncertain and at times uncontrollable tax implications. We tailor a portfolio to custom fit your needs. Of course, we take into account a client’s individual income needs as well as their risk-tolerance level in choosing specific fixed income strategies. Other factors include: the securities’ credit rating, whether that credit rating is deteriorating or improving, maturity date, if they are callable or non-callable, convertible or non-convertible, the current shape of the yield curve, as well as sector diversification where applicable.

Our management seeks to maximize income first and provide growth opportunity second. To do this we use two approaches. The first is an “immediate gratification” approach where our portfolio managers identify yield dislocations in the market. Transactions may include bond swaps to capture immediate increased yield on bonds with similar characteristics, riding the yield curve down by selling before maturity, call-date strategies, credit-upgrade sales, and other immediate income trades. The second is a “delayed gratification” approach where our portfolio managers seek pricing dislocations in the market, which may increase future capital gains. This strategy doesn’t serve to increase immediate yield, but aims instead to maximize future capital gains.

 

  • This information is not intended to be used as the primary basis of investment decisions.  Individual investors needs vary and this should not be construed as advice.
  • The information contained herein is not an offer to sell or a solicitation of an offer to buy the securities, products or services mentioned, and no offers or sales will be made in jurisdictions in which the offer or sale of these securities, products or services is not qualified or otherwise exempt from regulation.

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