Wealth Management > Investment Management > Fixed Income Strategy

Fixed Income Strategy

The value of a reliable income stream

We believe the primary function of bonds is to provide reliable income streams and stability of principal. We utilize a buy and hold strategy of staggered bond maturities to meet this need. We do not actively trade bonds as a means to generate principal growth or capital gains in a portfolio.

By using this laddered portfolio strategy, we are able to produce consistent and reliable cash flow, while also providing a stabilizing effect on the principal value of the overall portfolio. We also minimize interest rate risk, since the staggered maturities allow for regular reinvestment opportunities. If interest rates are on the rise, we are able to capture those increased yields as bonds mature in regular cycles. If interest rates are falling, we keep the bulk of the portfolio locked in at the higher rates.

For most clients we suggest a laddered portfolio of bonds with annual maturities extending out ten to fifteen years, depending on the objectives of the client, economic and business conditions, and yield curve fluctuations. This allows us to maximize return and minimize risk by capturing significant intermediate term yields, without exposure to the more volatile long term segment of the bond yield curve.

We do not actively trade bonds as a source of growth or appreciation in investment portfolios. Therefore, returns in the bond portion of portfolios will track closely with the interest income received from bond coupons.

Historically, bond coupon income has averaged between 5% to 8% depending on credit quality and maturity. Typically we develop a diversified portfolio of bonds (treasury, agency, corporate, and tax-free) with short to intermediate maturities. Over time, this approach will offset short-term market interest rate fluctuations and provide a reliable and sustainable income stream for our clients.

Our current Fixed Income Composite Performance