Investment Process
Our process relies on careful sector rotation, yield curve management and issue selection with the goal of capturing the bulk of available incremental returns. We believe that an emphasis on yield, keeping duration neutral to the benchmark, can produce consistent, predictable returns over time. To learn more about neutral duration fixed income management, please read the Q&A with our fixed income team.
Sector Rotation
Complexities and disparities of bond market securities require specialization by sector. Our four senior sector specialists focus on:
- Treasuries and Agencies
- Credits
- Mortgages and Asset-Backed Securities
- Commercial Mortgage-Backed Securities
Sector spreads fluctuate dramatically through time, providing ample opportunities to add value. Allocations to market sectors are made according to relative value opportunities. We carefully monitor our exposures and compare them to the benchmark index on both a market value and contribution to duration basis to attain proper diversification.
Yield Curve Management
We believe that emphasizing yield, in a duration neutral format, can produce more predictable returns over time. All portfolios are managed with durations closely in line with the client's benchmark or target. However, we actively manage the portfolio's exposure to particular areas on the maturity curve to take advantage of relative value opportunities or to capitalize on an expected reshaping of the curve.
Security Selection
Our bond selection process starts with the universe of U.S. dollar denominated, investment grade bond issuers. Our sector teams are responsible for identifying securities used in the construction of portfolios subject to the fixed income strategy team's overall sector target weight, industry weighting targets, and client specific guidelines and constraints.
Our corporate sector team and research staff intensively follow approximately 200 issuers of that universe. Generally, around 70 are deemed attractive to hold. Ten to twenty issuers that the corporate sector team feels will be especially critical to performance must be held in each portfolio (guidelines permitting) in order to minimize performance differences between similar accounts.
The information contained herein should not be construed as a recommendation to purchase or sell any particular security or investment vehicle offered by Mesirow Financial. The information included has been obtained form sources believed to be reliable, but is not necessarily complete and its accuracy cannot be guaranteed. Any opinions expressed are subject to change without notice. A complete list of composites can be made available upon request. Information is provided in U.S. dollar denominations. Investment management services offered by Mesirow Financial Investment Management, Inc., an SEC-registered investment advisor.
