Bonds Selection Process
Balanced
- Compliments equity component to lower portfolio risk
Maturity
- Ranges: Intermediate maturities (2 – 8 years)
Portfolio Structure
- Laddered based on best risk / reward characteristics
Sector Selection
- Add value by allocating between U.S. Treasuries, agencies, municipal, & corporate bonds based upon best total return opportunities
Risk Control
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Interest rate risk
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- Avoid long bonds
- Ladder maturities to take advantage of different interest rate periods for reinvestment
- Use higher coupon bonds
Credit Risk
- Strict credit criteria – equity approach
Event Risk
- Diversify among U.S. Treasuries, agencies and investment grade municipal and corporate bonds. No more than 5% of portfolio held in any one issuer.