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Bond
Portfolios
The firm's three guiding principles for Bond management are:
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1 - |
Safety of principal; |
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2 - |
Conservative duration management; and |
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3 - |
Optimization of yield. |
Bond portfolios are well diversified, high
quality portfolios with individual
credits thoroughly researched in-house. A top-down process utilizing
fundamental
economic analysis is followed to determine policy duration and currency allocation. Portfolio yield is optimized
by yield curve positioning, and by emphasizing high quality non-cyclical corporate bonds. The key factors analyzed
in determining fixed income policy are the outlook for economic growth and inflation, budget and trade deficit
performance, as well as the current and forecast shape of the yield curve. Bond risk is controlled through rigorous
internal credit research. The risk from interest rate volatility is minimized by trading within a defined, conservative
duration range and by investing in U.S.
pay bonds when Canadian interest rate and currency risk is considered high.
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