white papers

Active Management of Bond Risks

Building a bond portfolio with a desired risk-to-reward profile is more complex than simply buying bonds and holding them to maturity. Understanding the risks in fixed income can help an investor avoid pitfalls while optimizing opportunities in pursuit of long-term goals. An investor must determine the maturities, structure, sectors, and credit qualities appropriate for a given risk tolerance and consider how the bonds fit in an overall portfolio.

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Interest Rate Risk: Understanding Duration and Convexity

Most people look at the maturity of a bond to gauge the security’s risk. Maturity, however, only looks at the time until repayment of principal. To accurately measure a security’s risk, both principal and coupon payments must be considered. The use of two metrics better defines a security’s risk: Duration and Convexity.

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The Power of Dynamic Asset Allocation

Diversification plays an important role in investing and the implementation of diversification within a portfolio can be a powerful tool that mitigates risk. However, diversification itself may not always be enough to achieve an investor’s goals and, in some instances, can even stand in the way. We believe a dynamic approach to portfolio construction that improves upon traditional asset allocation methodologies can offer better risk-adjusted returns.

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Mid Caps: An Opportune Time to Allocate to this Overlooked Asset Class?

Coming out of a downturn, mid caps have historically outperformed large and small caps. In this article, we review the characteristics, attributes, and performance track record of this overlooked asset class.

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Bond Investing in a Volatile World: How to Manage All Fixed Income Risks with Quality, Nimbleness, and Active Management

In this backdrop of rising rates and elevated risks, fixed income investors of all types experienced some degree of price movement within their portfolio. Investors that had thrown money at high-yielding bonds of lower quality or longer maturities suddenly found themselves down 15%, 20%, or more. The importance of risk awareness became painfully clear. In this paper, we discuss the importance of managing all risks in fixed income and why it matters to be active, nimble, and up in quality.

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Covered Calls: An Equity Solution for Enhanced Income

In an era of low yields, elevated inflation, and choppy equity markets, some investors are turning to non-traditional methods to generate income and mitigate volatility. Covered call option writing, also known as a “buy-write” strategy, can offer a steady stream of incremental income while reducing downside risk for a portfolio.

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A Captive Guide for Managers

In this guide, insurance portfolio managers Don Miller and Jeff Matthias describe a time-tested approach for steering both young and established insurance companies towards the potential for improved risk-adjusted returns with ample consideration given to an insurer’s unique situation.

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Stock and Bond Market Risk Measures: A Review of Common Risk Statistics

There are many ways to measure risk in a stock or bond portfolio. Investors might look at price volatility, return fluctuation in relation to a benchmark, how a portfolio responds in a down or up market, and more. The following are common statistics investors use to help align their portfolios with their individual risk tolerance and set them up for optimal risk-adjusted returns.

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