Core Concepts
Fixed Income Portfolio Management
Fixed Income Portfolio Management
Fixed Income Portfolio Tailored To Your Objectives
Atlas creates conservative investment portfolios using fixed income securities. An allocation to individual bond securities can be part of a standalone strategy or the fixed income portion of a balanced account. The fixed income allocation is expected to generate a modest return with low risk of loss. A fixed income allocation is tailored to each client’s specific objectives and marginal tax bracket.
Though uniquely constructed, each bond portfolio includes these characteristics:
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High Quality |
Seek holdings rated Single-A or higher. |
|---|---|
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Diversified |
Guarantor exposures typically vary within a 1% – 5% range depending on the size of the portfolio. |
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Tax-Exempt |
Emphasize General Obligations and Essential Services municipal bonds (Water/Sewer, Utility, certain Public Transport). Avoid Economic Development and securities tied to project economic success. |
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Corporate Bonds |
Emphasize broad industrial holdings; almost no financial services exposure. |
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Government Bonds |
Modest exposure, emphasize Treasury Inflation Protected Securities (TIPs) and Agencies. |
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Laddered |
Portfolios have maturity distributions that ensure cash flows are spaced out and predictably timed. Even if underlying market interest rates are rising, portfolios are not disproportionately exposed. Additionally, coupon income can be reinvested as market conditions dictate. Individual security allocations in lieu of ETFs allow for more efficient cash flow timing and tax optimization. |
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Low Optionality |
Many bonds have intricate options that allow issuers to call the bond prior to maturity. This option is more likely to be exercised when interest rates are falling and you least want your bond’s cashflows to be taken away from you. Atlas emphasizes bonds that have no call features to help guarantee predictability of future cash flows. |
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Held To Maturity |
Fixed Income securities are bought with the expectation of holding them to maturity. Bonds held to maturity are insulated from realized gain/loss tax consequences; the intra-holding period mark-to-market gain/loss is never recognized. |
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Standard |
We avoid Structured notes, Principal Protected notes, Collateralized Mortgage Obligations (CMOs), Collateralized Debt Obligations, or any complex or opaque securities constructed to look like a bond. |
