Fixed Income Management
For many, bonds are an important element of portfolio strategy. Bonds can provide current income, portfolio stability and opportunities for capital appreciation. At SKY, we manage bond portfolios to complement your core equity portfolio.
While our clients’ needs can vary greatly, our goal is consistent – to construct a fixed income portfolio structured to meet a given client’s particular need for income, capital preservation and growth.
Fixed Income Strategy
Development of a fixed income strategy begins with understanding your income needs and tax situation within the context of your investment horizon and attitude towards risk. With this information in mind, we begin to sketch out an appropriate portfolio strategy:
- Sectors of the bond market to emphasize – a function of your tax situation that reflects which sectors of the bond market offer the best value.
- Target average maturity of holdings – based on your income needs, the prevailing structure of interest rates and your attitude towards portfolio volatility.
- Definition of capital requirements – bond durations are matched with predetermined capital needs.
- Risk tolerance – your attitude towards risk affects portfolio design.
Once these important elements of fixed income strategy are defined, we begin to construct a portfolio of bonds selected from the taxable or tax-free fixed income universe. Maturities are generally laddered across a span of years and are structured to meet your targeted average maturity and provide flexibility should interest rates change dramatically.
We monitor bond holdings relative to credit expectations and your changing tax situation. From time to time, it may become desirable to lengthen or shorten the ladder depending upon interest rate expectations, or we may modify holdings to take advantage of pricing opportunities.
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