Tax-Exempt Fixed Income
Strategies:
| Strategy | Benchmark |
|---|---|
| Intermediate Tax Free Fixed Income | Barclays Capital Municipal Bond Index |
| Tax Exempt Cash | SIFMA Municipal Swap Index |
Target Client:
Taxable investors in high tax brackets.
Investment Objective:
To generate a total return, net of investment management, transaction, and capital gain tax costs, in excess of the relevant benchmark index.
Investment Philosophy:
We believe:
- Interaction between market forces continuously creates inefficiencies and thus opportunities to generate alpha.
- Specific/individual alpha-generating opportunities are never permanent; eventually they are arbitraged away by the market.
- To recognize and exploit these alpha-generating opportunities an investment manager must be fully immersed in the market.
- Alpha is good but risk-adjusted alpha is better. The pursuit of superior returns through alpha-generating opportunities must be tempered with risk controls.
Investment Process:
Our investment process recognizes the dynamic and varied nature of alpha opportunities which occur in the Fixed Income market.
Discover
Alpha generating opportunities are searched for at both the macroeconomic level and the security selection level.
Assess
We test our discoveries for relative value and for associated risk in various sectors to see if our theories are correct. If correct, is the opportunity macroeconomic or sector/security selection in nature.
Invest
Mispricings often occur between sectors such as treasuries, agencies, corporates, mortgage backed securities and asset backed securities. Also the relative complexity of a security often misprices risk. If the mispricings exist, we focus on that particular opportunity. If we find that the mispricings do not exist, we revisit our assessment of the discovery.
Monitor
Once investments have been made, we monitor the investments to ensure the basis for purchases is still valid and also to discover if there are better opportunities available elsewhere.