The Case for Laddering Bonds
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After an extended period of historically low interest rates, income-focused bond investors have finally found relief as interest rates have risen to levels not seen since late 2007 (see Chart
Separately Managed Account
1-10 Year Laddered Corporate Bond Portfolio
This portfolio seeks to generate a stream of income from a portfolio of 30 carefully chosen investment-grade corporate bonds. We construct each portfolio like a “ladder” with maturity “rungs,” ranging from 1 to 10 years. Three bonds, or about 10% of the portfolio’s holdings, are expected to mature each year. The principal from each maturing issue gets reinvested in new, typically higher-yielding, 10-year bonds.
Another feature is the relatively stable 5-6 year average maturity of the portfolio, which can help control risk and improve tax efficiency versus higher turnover strategies. We continually monitor holdings with an eye toward maintaining portfolio credit quality objectives.
1-7 Year Laddered Corporate Bond Portfolio
This portfolio seeks to generate a stream of income from a portfolio of 21 carefully chosen investment-grade corporate bonds. We construct each portfolio like a “ladder” with maturity “rungs,” ranging from 1 to 7 years. Three bonds, or about 15% of the portfolio’s holdings, are expected to mature each year. The principal from each maturing issue gets reinvested in new, typically higher-yielding, 7-year bonds.
Another feature is the relatively stable 4-year approximate average maturity of the portfolio, which can help control risk and improve tax efficiency versus higher turnover strategies. We continually monitor holdings with an eye toward maintaining portfolio credit quality objectives.
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Municipal Bond Primer
This “primer” on Municipal Bonds is part of our education series for fixed income investors. In this first edition publication, we cover several concepts key to understanding the basics and
Q3 2021 Tactical Asset Allocation
Key Points:
U.S. Leads the WayPolicy Supports Remain Despite ReboundForeign Economies Lag RecoveryRates Move to New Lower GroundTactical Focus: Domestic and High Quality
As the economy reopens, we believe growth is set
A Discussion Worth Having
Is there a way for bond investors to win if interest rates rise? We think laddering bonds is one way to navigate an uncertain and changing environment.
First, we must start
To The Bone
Interest rates on bonds are at very low levels. The decline in the United States rates follows those of other sovereigns like Germany, the United Kingdom, and Japan (Chart A,
Please see important Disclosures.
Portfolio Factsheet
