Fixed Income Perspectives
Choosing a Fixed Income Manager
October 30, 2014
Role of Fixed Income in Asset AllocaƟon
Even in today’s low interest rate environment, fixed income can play a vital role within an asset alloca on. Bonds generate
income which can be used to meet cash needs while avoiding poten al costly liquida ons. Furthermore, an alloca on to
fixed income investments can dampen the vola lity of the overall por olio.
Choosing a
Philosophy
Fixed
Income
Investment
Any fixed income investment philosophy must address the
four main risks found in all fixed income por olios: credit
risk, rela ve interest rate risk, structure risk and liquidity
risk. Every manager must choose what level of each risk is
appropriate for their por olio given the amount of return
available. These choices will lead to the overall riskiness
of the por olio.
Managers can easily be assessed by plo ng them on
each risk spectrum to achieve a solid understanding of a
por olio’s risk level. A client can then decide if that
por olio fits their risk tolerance profile.
How Reinhart Partners Fits
The Reinhart Partners philosophy is as simple as it is effec ve; approach risk conserva vely while s ll delivering income
poten al with low vola lity. Reinhart invests only in high quality investment grade bonds, minimizes rela ve interest rate
risk by maintaining dura on similar to the benchmark and builds well-structured, liquid por olios u lizing primarily noncallable bonds. Reinhart Partners fixed income products fit into a por olio as either a standalone or complementary
alloca on. As a standalone alloca on, Reinhart fixed por olios work well for clients looking to earn a fair return with a
rela vely low risk profile. Reinhart also is a good fit for clients looking to transi on from riskier por olios as risk/return
tradeoffs become less favorable. For those clients looking to have a riskier profile, Reinhart por olios provide a buffering
complement for an alloca on to riskier strategies.
Reinhart Partners, Inc.