Taxable Bond Strategy 2020-10-13T13:57:33-05:00

Taxable Bond Strategy

Philosophy

MCM’s fixed income investment strategies pursue the belief that fixed income portfolios represent the foundational portion of an overall investment allocation, acting as the ballast to the risker allocations. Therefore, it is our practice to avoid the riskier, or less liquid corners of the fixed income market in search of every last bit of yield. Rather, we employ a time-tested, diligent investment process to build high quality, fixed income portfolios that are suitable for a given market environment.

Objective

MCM’s Taxable Bond strategy seeks to deliver total returns, on a risk-adjusted basis, that exceed the Bloomberg Intermediate Government/Credit Index.

Strategy

MCM’s Taxable bond strategies employ three stages in constructing portfolios made up of taxable securities, including exchange-traded funds. We start with a top-down viewpoint, evaluating the current economic environment, monetary and fiscal policies, and secular trends to identify the pressure on monetary authorities towards future interest rate moves. These factors inform the Fixed Income Investment Committee in determining how portfolio duration will be established. Portfolio duration can range from 1.5 – 6.0 years. We then utilize our proprietary credit analysis model to determine which candidates we would consider applying to the portfolio construction, favoring those we believe to be in an improving credit position and avoiding those moving in the opposite direction. Then we determine valuation and trading strategies, the final and most impactful step in the process on the strategy returns.

Team

Ken Green, CFA – PM, Principal with Mitchell Capital since 1991, analyzing fixed income since 1986

Phil Kernen, CFA – PM, Principal with Mitchell Capital since 2005, analyzing fixed income since 1992

Christen Dusselier – PM, Principal with Mitchell Capital since 2001, analyzing fixed income since 2001

What sets this strategy apart?

Long-term management team with ownership in the firm

Close working relationship with MCM’s equity team to ensure the Fixed Income strategies benefit from equity research and expertise

Flexibility allowing for responsiveness to changes in economic environment

Bond Strategies: September 30, 2020

Strategy Characteristics

CharacteristicTaxable Bond
Yield to maturity0.65%
Average coupon2.49%
Average maturity2.81
Duration2.68
Average ratingA1/A+

Sector Weightings

SectorTaxable Bond %
U.S. Treasury Notes16.1
U.S. Agency Notes10.4
Corporates:70.1
Banking/Finance13.0
Energy2.6
Industrials39.0
Telecom1.3
Transportation5.0
Utilities9.2
Muni Bonds:0.1
Other0.0
Cash3.2

‏‏‎ ‎

The information above is intended solely to provide insight into how the manager analyzes securities, and are not a recommendation for any particular security or strategy. There is no assurance securities will remain in the portfolio or will be profitable. This is a list based on a percent of total and is not a full list of securities.

Ratings Distribution

Moody/S&PTaxable Bond %
Aaa/AAA27.9
Aa/AA13.2
A/A37.5
Baa/BBB21.4

Maturity Distribution

Taxable Bond %
‹ 1 year25.2
1 – 3 year33.4
3 – 5 year28.6
5 – 7 year10.6
7 – 10 year2.1
› 10 year0.0

About Mitchell Capital Management

Mitchell Capital Management (MCM) was founded in 1987 and is an SEC Registered Investment Advisor. The firm manages portfolios and provides investment solutions for an array of investors nationwide, including individuals, foundations, union pension plans, retirement plans, endowments and associations. MCM has always been employee owned and intends to stay that way. Our fiduciary culture means our clients are the first priority in each decision we make.

Disclosure: https://mitchcap.com/disclosure/

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