Core Fixed Income Strategy

Objective

The Core Fixed Income Strategy seeks to achieve a rate of return in excess of notable market indices by applying a strategy focused on low turnover, preservation of capital, duration management, and sector and security selection.


Strategy

We invest in creditworthy entities to achieve a predictable level of current income and provide a buffer to equity volatility. Over an entire interest rate cycle, we expect to earn a positive rate of return in excess of inflation. As such, we consider future economic conditions and their expected impact on bond prices and yields, the systematic translation of strategy into immediate portfolio action, and the accuracy and timeliness of credit analysis.


A basic tenet of our fixed income strategy has always been that longer-term trends in interest rates are largely determined by inflationary trends. Portfolios will have higher duration targets when interest rates exceed inflation and inflation trends are projected to be stable or declining. Expectations of higher inflation typically produce a more conservative, shorter-duration bond portfolio.


The Fixed Income Investment Committee reviews consolidated bond portfolio holdings, sector weightings, and duration targets quarterly. We perform an independent credit analysis on all corporate bond holdings to insulate portfolios from any principal losses and to identify security selection opportunities.