Intermediate Fixed Income - Davidson Investment AdvisorsVideo
Intermediate Fixed Income Strategy
Philosophy/Mission Statement
The Intermediate Fixed Income strategy focuses on creating a portfolio which optimizes the risk/return tradeoff within securities whose maturities fall between one and ten years. Our philosophy of investing dictates that the opportunity set is greatest within the intermediate sector of the yield curve given that liquidity and diversification requirements are met. The mission is to create a portfolio of highly liquid fixed income securities which will produce current income and the potential for appreciation over the long-run.
Process
Davidson Investment Advisors' Intermediate Fixed Income strategy relies on a bottom-up process, though taking into consideration the general level and direction of interest rates, sector analyses and credit quality as part of the portfolio construction matrix. Views on the direction of interest rates are expressed via duration tilts relative to the reporting benchmark. The portfolio duration will fluctuate between 75% and 125% of the Barclays Intermediate Government Credit Index. Sector emphasis and credit quality decisions are made based upon opportunities which exist in the marketplace given the optimization of a risk/reward tradeoff.
Information is gathered through the use of a multitude of sources focusing on yield curve analysis, macroeconomic data, price discovery as well as new issue activity. Information providers include (but are not limited to) MarketAxess, primarily used for price discovery in the corporate bond market and FactSet, utilized for company fundamentals and Bloomberg for credit analysis and risk profiling. Purchases and sales are modeled in the Moxy trading system to better understand the marginal impact of trading activity relative to duration, individual security weighting as well as sector weighting. Orders are transacted at dealer prices, avoiding incremental markups or markdowns that are generally charged to investment advisors by Wall Street bond dealers.
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