Fixed Income
Madison Short-Term Strategic Income
Strategy Overview
Madison Short-Term Strategic Income is an active, total return strategy that aims to generate a high level of current income with diversified exposure to fixed income sectors, typically maintaining a duration range of 3-5 years. The strategy actively manages fixed income risks (duration, yield curve, sector, credit) through a disciplined investment process that emphasizes downside protection.
Key Facts
| Benchmark | Bloomberg 1-5 Year Government/Credit Bond Index |
|---|---|
| Strategy Inception | April 2016 |
| Investment Vehicles | Separate Account Active ETF |
| Investable Securities | US Treasury US Agency US Corporate Asset-backed, Mortgage-backed, and Commercial Mortgage-Backed Securities Collateralized loan obligations |
| Average Duration | 3-5 years |
| Maximum High Yield Weight | 25% |
Experienced Management
Mike Sanders, CFA®, FRM®
Head of Fixed Income, Portfolio Manager
Investment Process
We actively manage the risk levers in a portfolio through a disciplined and repeatable process that emphasizes downside protection and preservation of capital.
- 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 in the portfolio based on our expectations for interest rate changes and yield curve shifts.
- Sector Analysis – Quantitative analysis on historical spreads to find the best risk/reward trade-off among fixed income sectors.
- Quality Assessment – Alongside our qualitative macro work, we utilize quantitative analysis to continuously monitor investment-grade sectors.
- 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.
Extensive credit research
Combination of proprietary analysis and third-party research helps us identify market inefficiencies and pursue securities and sectors offering the greatest risk-reward trade-off.
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.
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.
Bloomberg 1-5 Year Government/Credit Index: tracks USD-denominated, investment grade, fixed-rate bonds, including treasuries, government-related, and corporate issues. The Index includes securities with at least one, and up to, but not including, five years until final maturity.