Investment Grade SMA

Launch of strategy: January 1, 1993   |   Account minimum: $100,000*

The portfolio management team employs a value approach whereby we purchase only U.S. dollar denominated corporate bonds and seek those that we feel are undervalued. Investment decisions made by the portfolio management team are based on independent fundamental credit analysis, relative value comparisons and yield curve considerations. Bonds must be rated investment grade by one of the three major credit rating agencies (S&P, Moody’s or Fitch) to be considered for purchase. 

An investment grade (A3/A- minimum) average credit rating is the constant target. BBB bonds are purchased, to a maximum of 30%, to enhance cash flow, reduce interest rate sensitivity and provide greater potential capital appreciation. In the event of a downgrade, the security may be held if we anticipate credit improvement in the future. Our focus is on the potential future value of individual corporate issuers based on potential earnings growth and stability over the long term.

Portfolios are diversified with 20 – 25 equally weighted positions and fully invested with an average maturity in the intermediate range (5 -10 years). We avoid any interest rate anticipation or market timing. The intermediate part of the yield curve historically has offered investors a favorable risk/reward opportunity. A historical low portfolio turnover of approximately 25% per year helps to reduce transaction costs.

Liquidity and safety are enhanced by investing only in bonds with an initial issue size generally in excess of $100,000,000. We access over 30 institutional broker/dealers seeking competitive bids and offerings. This trading network provides all of our clients with best pricing. A strict sell discipline is employed within the strategy.