SHORT DURATION
Investor Profile
An investor in the Short Duration Fixed Income Strategy seeks first and foremost preservation of principal. This investor is willing to accept a low level of current income in order to protect principal from temporary losses.
Strategy Objective
The Short Duration Fixed Income Strategy is positioned to earn a return greater than a money market fund while taking modest credit risk and minimal interest rate risk. The target distribution is over three percent. Principal preservation is the key focus of this strategy.
Strategy Characteristics
This strategy will utilize a select number of funds that focus on beating short duration bond indices. Although the strategy may include a fund or two that takes meaningful credit risk, the majority of fund managers selected will not take a lot of credit risk and very few, if any managers, will take meaningful interest rate risk. The ability of fund managers to beat indices will come from skillful overweighting or underweighting various short term fixed income investments.
Strategy Process
In a strategy as risk-adverse as this with little expected return, there is a risk managers will stray from core investments in an attempt to add extra return to the fund. We are looking for managers that are disciplined and keep these types of investments to a minimum. However, we are cognizant that the ability to add alpha in this strategy may come from a viewpoint that differs from ratings agencies. There may be a fine line between adding alpha and “reaching for yield” and we are particularly focused on monitoring this dynamic within funds selected. We will change managers if we believe it is in the best interest of the strategy.
*The investment(s) discussed may not be suitable for all investors. Investors should make investment decisions based on their own specific investment objectives and financial circumstances.
**Additional information is available upon request.
***Any investment contains risk, including the risk of total loss, fluctuating prices and uncertain returns.
**Additional information is available upon request.
***Any investment contains risk, including the risk of total loss, fluctuating prices and uncertain returns.
