Printable Format Sitemap Our approach to bond investing seeks to keep risk low in three ways. First, we emphasize fundamental analysis to find bonds with attractive valuations, rather than attempting to forecast changes in the direction of interest rates. Predicting interest rate changes accurately and consistently is nearly impossible and therefore adds to portfolio volatility, but not to the client's return. Finding undervalued bonds, at both the sector and individual security levels, is hard work, but it is a more consistent, reliable way to add value.
Most portfolios have an average maturity of five to seven years.
Second, we stress high quality and safety of principal in the individual bonds we buy. Third, we manage risk at the portfolio level, diversifying by sector, geographic location, maturity, and issuer. The research process for tax-exempt securities addresses qualitative as well as quantitative factors. Primary determinants are credit quality, call protection and yield level relative to alternative ideas. Our analysts evaluate the current status of the borrower and judge whether its key economic and fiscal trends are improving or deteriorating.