Fixed Income Management

  • High quality securities
  • Laddered portfolio
  • Intermediate term average maturity
  • Diversification
  • Tax efficiency
  • Low Turnover
  • Competitive brokerage
MMPW will employ a fixed income style of management that seeks to build a high quality bond portfolio with an intermediate term average life. Bonds are purchased in a competitive environment from multiple dealers. Capital preservation and current income generation are the primary objectives for each fixed income portfolio. To achieve these objectives the Firm employs a fixed income strategy based on the following common components:

Intermediate Average Maturity: The average life of the portfolio is generally maintained at approximately five years. This is adjusted within a range of 3 - 7 years dependent upon the shape of the yield curve and the interest rate environment.

Laddered Portfolio: Bond maturities are laddered to maintain an even distribution over approximately 1 to 15 years to achieve the desired average life. This reduces the volatility of the portfolio and eliminates the risk of missing opportunities in periods of rising interest rates. It also provides a way to adjust the life of the portfolio without having to liquidate securities.

Low Turnover: Low portfolio turnover minimizes trading expenses which have a significant impact upon the total return of the portfolio. Absent some compelling reason (i.e. credit quality, client needs), fixed income securities are generally held to maturity.

High Quality Bonds: Fixed income securities purchased for client accounts are limited to investment grade or unrated securities of comparable quality and/or obligations of the U.S. Treasury.

Tax Exempt Accounts: Fixed income portfolios constructed within a qualified retirement account or Individual Retirement Account (IRA) will consist of a mix of debt obligations of the U.S. Treasury and U.S. Government agencies as well as corporate securities with a rating of A or better. The portion of the portfolio invested in corporate securities is broadly diversified among different economic sectors and industries.

Taxable Accounts: Fixed income portfolios constructed within a taxable account will consist of tax exempt securities or taxable securities. With a goal of maximizing after tax income, the ongoing analysis of each client's marginal tax bracket will determine the relative value of using tax-free or taxable bonds. The quality orientation for this type of account is consistent with the high quality parameters established for all fixed income portfolios under the management of MMPW. Once a portfolio is in place it is continuously monitored for credit quality, call features, maturity reinvestment and specific client needs.

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