The Short Term strategy is benchmarked to the Bloomberg 1-3 Government Index. The strategy primarily invests in Treasuries and Agencies but may opportunistically invest in Investment Grade Corporate securities, Mortgage-Backed Securities (MBS), Commercial Mortgage-Backed Securities (CMBS), Asset-Backed Securities (ABS) and Sovereign Debt, when those sectors offer attractive risk-adjusted yields.
We intend to exploit periodic inefficiencies in the short end of the yield curve by risk-adjusting various sectors, utilizing yield curve and sector analysis, and combining that with fundamental research to produce a well-diversified portfolio that optimizes risk-adjusted yield, while maintaining principal preservation and appropriate liquidity as the primary objectives.
PIA’s short term investment process balances the quantitative nature of our yield curve analysis with fundamental research to produce a portfolio that emphasizes sector selection, yield curve positioning, duration management and security selection in an attempt to produce above average risk-adjusted yields in undervalued sectors, while providing an opportunity for capital appreciation.
- PIA deconstructs the short end of the bond market (1-3 year maturities or weighted average lives) into yield curve, quality and industry sectors and utilizes quantitative tools to identify those sectors that are undervalued on a risk-adjusted basis.
- When employing corporate securities in the portfolio, we combine fundamental top-down industry analysis with bottom-up fundamental security and ratio analysis to select investment grade credit securities that offer attractive risk-adjusted yields.
- Additionally, we utilize multi-factor models that produce value and risk metrics to identify attractive Mortgage-backed (MBS) and Asset-backed Securities. Given the firm’s expertise in MBS research, the strategy often employs these securities to provide attractive incremental income.
- Portfolio managers construct portfolios consistent with the client’s liquidity and risk objectives and the strategy set forth by the firm’s Investment Strategy Group, which utilizes quantitative and fundamental inputs to develop portfolio strategy for sector selection, yield curve positioning and duration management.
- Risk measurement is a central theme throughout our investment process so that the portfolio is not biased towards higher risk sectors.
This strategy can be customized to investment guidelines and objectives, with the primary objective to optimize income while minimizing downside volatility.