Style
Our fixed income style is best labeled as interest rate anticipation based on expected future changes to the U.S. Treasury yield curve. Within each maturity sector, we use quality spread analysis to determine whether a specific security is rich or cheap relative to a comparable maturity, U.S. Treasury security.
Obligations Used
Typically, we use the following types of securities in our accounts.
Maturity Sector
Instruments
Short term
(within one year)
- U.S. Treasury Bills
- U.S. Agency Notes
- Certificates of Deposit
- Commercial Paper
- Bankers Acceptances
- Repurchase Agreements
- EuroDollar CDs
- EuroDollar BAs
- Yankee CDs
- Yankee BAs
- Municipal Notes (if appropriate)
Short-intermediate term
(one to three years)
- U.S. Treasury Notes
- U.S. Agency Notes
- Corporate Notes
- Foreign Government Notes
- Mortgage-backed Securities
- Taxable Municipal Bonds
- Tax Free Municipal Bonds (if appropriate)
Intermediate term
(three to seven years)
- U.S. Treasury Notes
- U.S. Agency Notes
- Corporate Notes
- Foreign Government Notes
- Mortgage-backed Securities
- Taxable Municipal Bonds
- Tax Free Municipal Bonds (if appropriate)
Long Term
(longer than seven years)
- U.S. Treasury Notes & Bonds
- U.S. Agency Notes & Bonds
- Mortgage-backed Bonds
- Corporate Bonds
- Foreign Government
Notes & Bonds - Taxable Municipal Bonds
- Tax Free Municipal Bonds (if appropriate)
Techniques
We compare the current U.S. Treasury yield
curve with the expected future yield curve to determine the risk/reward trade-off in structuring client accounts.
In making the determination, we review the following:
a. Central Bank Policy
b. Global, economic, & political outlook
c. Domestic, economic, & political outlook
d. Relative currency outlook
e. Relative market psychology
From this review and specific client objectives,
securities in the appropriate maturity section are chosen.
If we are using taxable securities, specific issues are evaluated for credit risk, yield spread, sector value, and the like. Tax-exempts are evaluated for credit risk, supply factors, overlapping debt, and economic strength of the political entity backing the issue.
If cash equivalents (short-term investments) are used, we review credits carefully. Risk changes with increasing speed these days. Active management is a must. Corporate change of control can create to9day’s “junk” from yesterday’s quality issues.
Quality
Our philosophy is to use high quality securities for our client accounts. Our normal bond investments are rated A or better in quality by at least one of the bond rating services. Money market instruments are usually in the top two ratings of the widely used short-term rating services or they are issued or guaranteed by a strong governmental unit.
Marketability
Today’s rapidly changing economic environment dictates maintaining a high degree of flexibility in your account. For these reasons, we use issues that have a high degree of marketability. This may mean some yield trade-off, but the added flexibility may vastly improve results over time.
The GeoVest Difference
With constant monitoring of fundamental economic changes and adherence to high quality issues, we can produce consistent long-term returns for your account.
We work with professionals who have had years of experience in good and bad markets. Only experienced manager’s work on your account; we are mindful that it is your money.
The GeoVest Fixed Income Approach
- High Quality
- Marketable
- Flexible
- Carefully planned to meet your directives
