Our primary objective for the Arcataur Investment Grade Fixed Income Portfolio is to provide consistent returns over long periods of time.  We blend high quality securities from the most attractive sectors of the fixed income investment spectrum, applying a discipline that maximizes total return for the degree of risk assumed.  We manage our client portfolios utilizing strategies based on quality, sector and spread analysis. Maturity, duration, convexity and liquidity are analyzed resulting in portfolio returns with the goal of meeting or exceeding industry benchmarks over the long run.  Our resulting portfolios are ones of high quality and low volatility to provide a consistent rate of return.  

 

Our fixed income process for the Arcataur Investment Grade Fixed Income Portfolio starts with a top-down, macroeconomic analysis to identify opportunities within the current business environment.  We start by focusing on macro economic data that impacts current and future direction of interest rates.  This includes inflation expectations, economic growth and financial security of bond issuers.  The U.S. Federal Reserve and global central banks’ monetary policies are critical constituents impacting current and future government bond yields which typically are the benchmarks for most fixed income securities. We look at the overall health of the economy to provide important insights into the stage of the business cycle and the implications for relevant economic fundamentals which impact fixed income valuations.  We also analyze historic and current spread differentials among Treasury, Agency and Corporate fixed income securities to identify the most attractive sectors within the fixed income markets. The result of our approach is to actively manage interest rate and credit risk while minimizing liquidity risk.   

 

Within the corporate sector, we select individual securities for further analysis.  Our credit research emphasizes high quality issues where we evaluate the level of pretax interest coverage, leverage and cash flow.  We also perform an in-depth sensitivity analysis as well as scrutinizing the overall bond structure of the client’s bond portfolio. For risk control, we limit the maximum allocation and position sizes across the various domestic investment grade sectors.

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