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“Our objective is to provide positive, risk-adjusted returns relative to the performance benchmark that best represents our clients’ financial goals.”

— Carl W. Pappo, Senior Portfolio Manager

Investment Approach

Intermediate Fixed Income offers a portfolio of high-quality securities that strives to take advantage of opportunities within the general risk parameters of the benchmark. Our investment approach focuses on seeking profit where we believe it will reward us two times greater than visible risk. We combine this philosophy with bottom-up independent research of each opportunity and diversification with the goal of reducing risk and cushioning volatility.

Distinguishing Features

  • Experienced investment team, with key managers averaging more than 20 years in the industry
  • High-quality portfolios focused on capturing relative value opportunities by emphasizing attractive subsectors or issues with characteristics that we believe are biased to outperform
  • Clear focus on evaluating potential returns against risk — incorporating mean reversion of yield curve and spread relationships and the asymmetric nature of risk inherent in fixed-income securities

Investment Process

The Intermediate Fixed Income team constructs its portfolio using the following approach

Deconstruct portfolio benchmark

Break benchmark into return components and characteristics

Identify relative value

Utilize proprietary and outside analytics to apply quantitative and fundamental approaches to relative value

Construct portfolio

Select issues and construct a portfolio following guidelines for:

  • Liquidity
  • Credit
  • Structure
  • Yield curve
  • Roll potential
Monitor portfolio and manage risk

Monitor adherence to portfolio risk limits relative to benchmark and client guidelines.

  • Monthly surveillance of collateral on structured credits
  • Relative credit exposure monitored to subsector and issuers by yield and quality
  • Rebalance as necessary