Fixed Income
Madison Opportunistic Credit
Strategy Overview
Madison Opportunistic Credit is an actively managed, total return strategy that aims to generate superior long-term risk-adjusted returns and a high level of income. The strategy actively manages fixed income risks (duration, yield curve, sector, credit) through a disciplined investment process that relies heavily on credit research.
Key Facts
| Benchmark | Bloomberg U.S. Intermediate Corporate Bond Index |
|---|---|
| Strategy Inception | January 2020 |
| Investment Vehicles | Separate Account |
| Investable Securities | U.S. Corporate Bonds |
| Average Duration | 0-9 years |
Experienced Management
Mike Sanders, CFA®, FRM®
Head of Fixed Income, Portfolio Manager
Alan Shepard, CFA®
Portfolio Manager, Analyst
Investment Process
We actively manage the risk levers in a portfolio through a disciplined and repeatable process:
- Duration Decision – We aim to identify key inflection points that signal interest rate changes and actively manage portfolio duration accordingly.
- Yield Curve Positioning – We position maturities based on our expectations for interest rate changes and yield curve shifts.
- Sector Analysis – We conduct quantitative analysis on historical spreads to find the best risk/reward trade-off among sectors.
- Quality Assessment – Alongside our qualitative macro work, we utilize quantitative analysis to continuously monitor sectors and issuers.
- Credit Selection – Our proprietary credit research, along with third-party research, combines quantitative and qualitative analysis to identify opportunities.
Defining Characteristics
Active risk management
Disciplined and repeatable process that actively manages fixed income risks (duration, yield curve, sector, credit).
Size advantage
Our size allows for institutional pricing scale with the nimbleness to pursue alpha with a high degree of conviction.
Flexible mandate
Can pursue below-BBB rated securities to capture higher yields.
Long-tenured management
Portfolio Managers have over 45 years of combined investment experience.
Madison Fixed Income Team
Mike Sanders, CFA®, FRM®
Head of Fixed Income, Portfolio Manager
Michael Massel, CFA®
Credit Analyst
Jeffrey Matthias, CFA®, CAIA®, CIPM®, CFP®
Portfolio Manager
Chris Nisbet, CFA®
Portfolio Manager, Analyst
Allen Olson, CFA®
Portfolio Manager, Analyst
Michael Peters, CFA®
Portfolio Manager, Analyst
Alan Shepard, CFA®
Portfolio Manager, Analyst
Arissa Wallander
Fixed Income Analyst
Related Insights
In addition to the ongoing market risk applicable to portfolio securities, bonds are subject to interest rate risk, credit risk and inflation risk. When interest rates rise, bond prices fall; generally, the longer a bond’s maturity, the more sensitive it is to this risk. Credit risk is the possibility that the issuer of a security will be unable to make interest payments and repay the principal on its debt. Bonds may also be subject to call risk, which allows the issuer to retain the right to redeem the debt, fully or partially, before the scheduled maturity date. Proceeds from sales prior to maturity may be more or less than originally invested due to changes in market conditions or changes in the credit quality of the issuer.
Yield Curve is a line that plots yields (interest rates) of bonds having equal credit quality but differing maturity dates. The slope of the yield curve gives an idea of future interest rate changes and economic activity. There are three main types of yield curve shapes: normal (upward sloping curve), inverted (downward sloping curve) and flat. Yield curve strategies involve positioning a portfolio to capitalize on expected changes.
Duration is a measure of the sensitivity of the price of a bond or other debt instrument to a change in interest rates. Duration measures how long it takes, in years, for an investor to be repaid the bond’s price by the bond’s total cash flows.
High yield bonds are considered lower-quality instruments known as “junk bonds”. Such bond entail greater risks than those found in higher-rated securities and, as a result, investments in the fund entail more risk than investments in average bond funds.
Indices are unmanaged. An investor cannot invest directly in an index. They are shown for illustrative purposes only, and do not represent the performance of any specific investment. Index returns do not include any expenses, fees or sales charges, which would lower performance.
The Bloomberg US Intermediate Corporate Bond Index measures the performance of USD-denominated investment grade, fixed-rate, taxable corporate bond securities with maturities greater than or equal to one year, but less than ten years, that are issued by US and non-US industrial, utility, and financial issuers.