Fixed Income

Individual fixed income portfolio holdings may differ depending upon tax status or liquidity needs, our overall approach is based upon a common frame of reference. We do not view the fixed income sector as a primary vehicle for appreciation and embrace a largely risk adverse approach. Holdings are structured and managed to provide a stream of income, dampen volatility in portfolio asset value, and provide liquidity.

To the extent the yield curve permits, we prefer a "laddered" maturity structure in order to avoid disruptive changes in the flow of income and to avoid the reinvestment risk resulting from an uneven pattern of maturities. With few exceptions, investments are largely within a ten-year maturity range in order to provide call protection and diminish volatility inherent with longer maturities.

Changes in the maturity structure and composition of the holdings are primarily made against the background of an anticipation of a meaningful change in the trend of interest rates. Forecasting this trend is the key determinant and is based upon an ongoing analysis if inflation expectations, Federal Reserve Policy, and the overall level of economic activity domestically and abroad.

In appropriate accounts, we also seek to take advantage of opportunities arising from spread differentials between industrials, utilities, financials, and US Governments as well as anomalies in maturity and quality rankings. When investing, we are highly conscious of the investment quality and marketability of our holdings.