Fixed Income
Reinhart Active Intermediate Catholic Values
Strategy Overview
Reinhart Active Intermediate Catholic Values is a high-quality, actively managed bond strategy with the goal of providing superior yields and returns while minimizing volatility and default risk. To pursue our goals, we emphasize high-quality securities through a duration-constrained approach. The strategy invests in U.S. Treasuries, primarily “A” or better corporate bonds, and mortgage and asset-backed securities with maturities of 10 years or less. To be included in the portfolio, securities must adhere to the U.S. Conference of Catholic Bishops (USCCB) investment guidelines.
Key Facts
| Benchmark | Bloomberg U.S. Intermediate Government/Credit Index |
|---|---|
| Strategy Inception | January 2013 |
| Investment Vehicles | Separate Account |
| Investable Securities | U.S. Treasury U.S. Agency & Mortgage-Backed Securities Primarily “A” or better rated U.S. Corporate Bonds AAA rated Asset Backed Securities |
| Average Duration | Usually within 10% of the benchmark index |
Experienced Management
William Ford, CFA®
Co-Head of Reinhart Fixed Income, Portfolio Manager
Michael Wachter, CFA®
Co-Head of Reinhart Fixed Income, Portfolio Manager
Socially Responsible Investing
The Reinhart Active Intermediate Catholic Values strategy utilizes internal research and external tools to screen for adherence to the USCCB investment policies.
Protecting Human Life
Promoting Human Dignity
Reducing Arms Production
Pursuing Economic Justice
Protecting the Environment
Encouraging Corporate Responsibility
Investment Philosophy & Approach
We view fixed income management as being first and foremost about risk management. Fixed Income investors face four main risks. We seek to contain the level of these risks in order to preserve capital and only increase these exposures when investors are adequately compensated by the markets for taking them.
Conservative Credit Allocation and High Quality
Adjust credit allocation with market conditions, always using mostly “A” rated or better issuers.
Duration Constrained
Portfolio duration is typically within 10% of the benchmark index.
Well Structured
Predictable cash flows at the portfolio and security levels.
Highly Liquid
Invest in highly liquid bonds primarily from large issuers with multiple securities across the yield curve.
Reinhart Fixed Income Team
William Ford, CFA®
Co-Head of Reinhart Fixed Income, Portfolio Manager
Michael Wachter, CFA®
Co-Head of Reinhart Fixed Income, Portfolio Manager
Peter Altobelli, CFA®
Portfolio Manager, Credit Analyst
Katherine Doyle
Portfolio Manager, Credit Analyst
Douglas Fry, CFA®
Portfolio Manager
Ajla Kavazovic
Credit Analyst
Adam Lynch
Portfolio Manager, Credit Analyst
Sarah Molitor, CFA®
Portfolio Manager, Credit Analyst
Andrew Scargill
Fixed Income Associate
Matt Stoner
Credit Analyst
Related Insights
In pursuing the Catholic Values strategy, the portfolio managers may forgo opportunities to gain exposure to certain companies, industries or sectors, and may be overweight or underweight in certain industries or sectors relative to its benchmark index, which may cause the strategy’s performance to be more or less sensitive to developments affecting those sectors. In addition, since this strategy takes into consideration factors beyond traditional financial analysis, the investment opportunities for the portfolio may be limited at times. Selection related information provided by issuers and third parties, upon which the portfolio managers may rely, continues to develop, and may be incomplete, inaccurate, use different methodologies, or be applied differently across companies and industries. Madison’s framework of Catholic Values investing will vary from other managers. Further, the regulatory landscape for such investing in the United States is evolving and future rules and regulations may require the strategy to modify or alter its investment process. There is also a risk that the companies identified through the investment process may fail to adhere to claimed business practices, which may result in the strategy selling a security when it might otherwise be disadvantageous to do so.
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.
Quality refers to the bond ratings provided by the various third-party ratings agencies. Stability and predictability refer to the cash flow of individual securities and not to the market value or performance of portfolio holdings. There is no guarantee this strategy will lead to investment success.
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.
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 Intermediate Govt/Credit Bond Index tracks the performance of intermediate term US government and corporate bonds.