In the Arcataur Investment Grade Fixed Income Portfolio, consistency of returns over time is our primary objective. We blend high-quality fixed income securities from the most attractive sectors of the investment spectrum, applying a discipline that maximizes total return for the degree of risk assumed. Client portfolios are managed utilizing strategies based on quality analysis, sector analysis and spread analysis. Maturities, duration, convexity and liquidity are analyzed, resulting in portfolio returns that should, over time, meet or exceed benchmarks. Our resulting portfolios are ones of high quality and lower volatility that should provide a consistent rate of return.

 

Our fixed income philosophy for the Arcataur Investment Grade Fixed Income Portfolio is to use a top-down, macroeconomic business cycle approach to identify opportunities. Sector decisions are made based on our macroeconomic evaluation, including the direction of interest rates and the economy. Security selection emphasizes high credit quality issues.

 

An overview of macroeconomic fundamentals provides important insights into the stage of the business cycle and the implications for relevant economic fundamentals which impact fixed income valuations. Analysis of historic and current spread differentials between treasury, agency and corporate fixed income vehicles identifies the most attractive sector of the fixed income markets. Concentrated evaluation of this sector then identifies individual securities for further analysis. Corporate fixed income issues identified as possible additions to the Arcataur Investment Grade Fixed Income Portfolio are further analyzed to assure acceptable levels of pretax interest coverage, leverage and cash flow. Our security selection emphasizes in-depth sensitivity analysis, credit research, and bond structure. For risk control, we limit the maximum allocation and position sizes across the various domestic investment grade sectors. Our approach is to actively manage interest rate risk and credit risk while minimizing liquidity risk to generate conservative risk-adjusted return.