Fixed Income Strategy
The core of the fixed income section of our portfolios is created with security of principal and income as primary considerations. High quality bonds provide diversification, reduce volatility, and generate secure, consistent, and predictable income. To maximize total return without taking unnecessary risks, we invest in high-quality short to intermediate term bonds. Our bond holdings are predominantly very marketable and provide flexibility for shifts in policy.
Our individually managed accounts allow us to tailor each portfolio to our client’s specific goals and objectives. One of the more important aspects to our management style is our sensitivity to tax issues. Insight into our clients’ tax status is the basis of the understanding needed to make appropriate fixed income investments and maximize the total portfolio’s return. Where appropriate, we do make use of value-added income vehicles such as convertible bonds and preferred shares.
The firm adds value in fixed income portfolio management in a number of ways. First, we consider key macroeconomic and political issues, money flows, currency markets, inflation trends and the factors driving Central Bank policy to assist in drawing conclusions about duration and bond term. Second, we monitor credit spreads across industries, sectors and issuers and control the weights invested in Federal, Provincial, and Corporate debt to take advantage of appropriate yield pick-up complemented by switch opportunities between comparable credits that improve yield. Third, the fixed income market yield curve structures are analyzed in order to identify overdone sentiment swings or variances that provide trading opportunities or assist with improving the timing of buy and sell decisions. It is also worth noting that we have access to wholesale pricing when we buy and sell on behalf of our clients and over time the elimination of unnecessary retail spreads clearly enhances returns. Finally, our equity research and the understanding of the general health of the economy, the relative strength of various sectors and the financial soundness of the specific issuer clearly assist in adding value.