We uphold stringent criteria to ensure that every bond we add to our portfolios is fittingly additive in terms of all material parameters including credit quality, maturity, and value.
Credit Quality: As bonds are essentially loans, we prioritize credit quality as a fundamental criterion in our selection process. Treasuries present unquestioned credit quality, as well as unmatched liquidity, and interest that is exempt from state taxes. For corporate bonds, key characteristics we demand include robust balance sheets, healthy cash flow coverage of interest, and stable, preferably growing, operational performance. In the municipal sector, we favor insured general revenue obligations issued in economically vibrant locales.
Maturity Structure: Even among bonds from the same issuer, performance and income can vary much between bonds of different maturities. In general, the longer the maturity, the more volatile the bond. With stability and high income as sought attributes from the fixed income portfolio, we have tactically shifted maturity structure to avoid undue principal risk during periods of low rates and to lock in good yields for longer spells during periods of high rates. Investors employing mutual funds or rigid ‘ladders’ targeting a specific maturity regardless of economic conditions have needlessly suffered over time.
Value: When we identify the maturity, sector, and security structure most beneficial to complement existing holdings in a portfolio, we meticulously scour the markets seeking excess value. Unlike stocks that trade with great efficiency on exchanges, bonds trade ‘over the counter’ directly between buyers and sellers. Corporate and municipal bonds often present price variations between extremely similar securities. We can be adept and take advantage to maximize income at any sought maturity and credit level.
Experience: The professionals at Byrne Asset Management have managed fixed income portfolios since the early 1980’s. We have successfully guided assets through double digit inflation, recessions, and multiple debt crises. We managed and advised mutual funds, foundations, insurance companies, and pension plans, handling about every type of security out there, including “junk” bonds, convertibles, mortgage-backed securities, derivatives (options and futures), and international debt. As we stick to our investment grade “knitting”, our clients can be confident that our wide purview serves the goals of safety and return quite well.