Taxable Fixed Income –
Intermediate and Core

Philosophy

Quality, stability, and predictability are the hallmarks of Reinhart Partners’ fixed income management philosophy. We believe that successful fixed income management is a product of maintaining a conservative discipline that does not take undue risks in pursuit of yield, but rather selectively takes on moderate risk exposures when the risk/reward tradeoff for that exposure is favorable. Click on the bars below for further explanation of our conservative risk management discipline and how we adjust risk exposures based on risk/reward favorability.

Risk Spectrum

Interest Rate Risk Credit Risk Structure Risk

(Click graphs to view risk details)

Experienced Portfolio Management Team

Portfolio managers average 17 years of investment management experience

Performance Incentive Plan
Aligns managers’ and clients’ interests to reward long-term performance

Michael J. Wachter, CFA

Michael J. Wachter, CFA
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Douglas J. Fry, CFA

Douglas J. Fry, CFA
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Katherine M. Doyle

Katherine M. Doyle
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Peter G. Altobelli, CFA

Peter G. Altobelli, CFA
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William F. Ford, CFA

William F. Ford, CFA
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Adam J. Lynch

Adam J. Lynch
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Sarah L. Thompson, CFA

Sarah L. Thompson, CFA
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Interest Rate Risk – Low Exposure

Conservative, long term focus

It is difficult, if not impossible, to predict short-term movements in interest rates. Therefore, Reinhart Partners portfolios’ durations will not substantially deviate from the duration of the underlying benchmark, and we will not adjust portfolio durations based on cyclical factors affecting interest rates.

We will allow portfolios’ durations and exposures to different parts of the Treasury yield curve to differ slightly from their benchmarks based on longer-term secular factors and interest rate trends.

Credit Risk – High Quality Focus

High quality investment grade credits provide the best long term risk/reward profile

Lower quality investment grade credits have significantly higher default rates and significantly greater spread volatility than higher quality investment grade credits. As a result, the higher yields of lower quality credits do not result in sufficient excess return to compensate for their greater risk. In fact, they often underperform higher quality credits. Higher quality investment grade credits do offer sufficient excess returns versus Treasuries to significantly outperform with low additional risk.

Structure Risk – Selective Exposure

MBS provide a favorable long-term risk/reward profile

Reinhart Partners will take on structure risk in clients’ portfolios in cases where the additional yield offered adequately compensates for the structure risk. Over most longer-term periods, the additional yield offered by GSE-guaranteed MBS will result in superior returns to Treasuries, and so we include these MBS in our portfolios as a way to generate excess returns while diversifying our risk exposures. In most cases corporate and US government agency bonds with call features do not provide sufficient additional yield over longer time horizons and are not included.