ARS Core Fixed Income Strategy

Investment Strategy

At ARS, our focus is to maintain and build purchasing power over time. Thus, our approach to fixed income investing is to earn an appropriate level of income consistent with capital preservation. We do not lower the standards for creditworthiness in the search for extra yield because, as we have seen, far too often this approach leads to excessive loss of capital.

Investment Process

Allocation Strategy

Our economic outlook is an important element in our assessment of interest-rate levels and creditworthiness for our evaluation of the bond market. We gauge the current interest rate structure to determine the best yield for a portfolio relative to the acceptable level of risk within our outlook for inflation.

Portfolio Construction

This top-down view is combined with fundamental analysis to evaluate credits across securities.

  • Portfolio positioning is based on careful consideration of acceptable credit, yield-curve and reinvestment risk relative to the amount of return generated — we evaluate the best strategy based on the yield objective of the portfolio and the risk tolerance we deem acceptable.
  • We invest primarily in corporate, U.S, and municipal debt securities, avoiding asset-backed, mortgage-backed and derivative securities, and do not employ the use of leverage.
  • In addition to individual security selection, we look at the relative value of sectors, sub-sectors, industries and corporate issuers when determining portfolio allocations.
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