Investment Process (continued):

We predominately keep our portfolios’ durations neutral to the benchmark.  Occasionally, market extremes do offer opportunities to add value.   On these occasions, we will take active duration risk within a narrow band of 80%-110% of the benchmark index.  This asymmetric approach allows us to be more defensive in protecting clients’ assets if rates rise than we are aggressive when rates are poised to decline.  Additionally, we will take advantage of market aberrations along the yield curve.

Risk Management
Our clients hire us to take risk with their assets.  Understanding and managing these risks overlay our whole investment process.  We have developed an in-house proprietary risk management system to monitor and fully understand the risks that we are taking with our clients’ assets.  All of our clients’ portfolios are constantly monitored by the entire portfolio management team to ensure each portfolio’s risk is consistent with our investment strategy.  Additionally, our proprietary risk management system allows us to evaluate portfolios and trades in real time if needed.  This risk management system groups accounts by similar benchmarks so that we can effectively align similar portfolios by duration, yield curve weightings and sector allocations.  This results in a narrow dispersion of investment results among portfolios within a composite. 

We add value through our integrated trading process.  Because our portfolio managers are actively involved in the firm’s investment strategy and research, they are better prepared to assess relative value of individual securities in the marketplace.   Also, our market position allows us to develop a variety of relationships with the street.  Our approved dealers vary from regional dealers to bulge bracket firms.  We have found that electronic trading is one way to ensure the most competitive prices for our clients.  We supplement electronic trading with extensive broker relationships to insure that we have access to all Wall Street inventory and provide “best execution” to our clients.  We do not trade with any affiliated brokers and we do not do any soft dollar trades.