We typically prefer opportunities that are high-grade corporate or municipal bonds (depending on the client's tax status) with a final maturity of three to 10 years. Taxable municipal bonds and callable Agency bonds may also be desirable. Fixed income obligations of a longer maturity are carefully weighed in light of current and expected interest rates, as well as inflation expectations. Currently, we do not believe that the slightly higher return of bonds with a long maturity is worth the interest rate risk.
We believe that a laddered portfolio of bonds is simple to construct, cost-effective, and usually provides satisfactory returns relative to benchmarks.
We optimize high-grade corporate or municipal bonds to help provide income generation. We may incorporate fixed income alternatives (e.g., REITs, preferred shares, MLPs, or convertible preferreds) if it makes sense, given the client's risk profile and investment objectives.