BALANCED PORTFOLIO

Our approach to create balanced portfolios follows the same philosophy and investment process as our equity portfolios, with the exception of introducing fixed income securities when constructing the portfolio.

We look at fixed income as an “anchor to windward” that generates a competitive return with relatively low risk. We actively manage maturity within a 3-10 year range using securities rated A or better at time of purchase.  Our primary focus is on U.S. Government issues, with diversification into agencies, corporates and mortgage pass-throughs. Tax-free issues are utilized when appropriate.

We do not use derivative securities. Once the requirements and restrictions of a client’s portfolio are determined, we buy issues with good liquidity of different issuers (government agencies, companies or public jurisdictions), with good covenants or other protection, i.e., non-callable issues. We also purchase according to specific portfolio needs such as income, taxes or long term returns.

When purchasing, an effort is made to buy new issues to minimize transaction costs. We search for the highest yield-to-maturity (lowest priced) bond available that meets all criteria.

Our fixed income process primarily involves four areas, active management, sector diversification, duration/maturity, and quality of fixed income securities.

 

chart