Capital Management's styles are designed to offer a broad range of maturities and each is tailored to fit a client's specific investment objectives and constraints. We separate our fixed income investment styles into five distinct areas:
Money Market/Cash Management
- Average maturity of 90 days or less
- High quality investments, with A1/P1 minimum quality on commercial paper
- The Ambassador Money Market Fund
- Benchmark is the 3-month Treasury Bill rate
Enhanced Cash Management in OTC-Private Placements of SME’s
- Maturity range is 0-3 years, with a duration average of 1-1.5 years
- Credit risk levels are a function of client objectives
- Can be structured to match a specific cash flow stream
- Benchmark is the SWX Index
Bullet Government Bonds
- Maturity range of 10-30 years
- Minimum average credit quality of AA
- Benchmark is the SWX Index
Our overall investment philosophy and style have remained constant since the inception of our firm. However, the strategies and analytical tools we employ are fluid and designed to adjust to changing market conditions
AICC Short Maturity
AICC investment approach for shorter maturity (under 3 years) portfolios follows the guidelines of safety, liquidity and yield.
Safety
Safety component of our approach has as its main objective the preservation of portfolio principal. The two best ways of protecting principal is through portfolio diversification and a comprehensive analysis of the credits in the portfolio. We maintain a large number of holdings in our portfolios for diversification and also generate credit research on all of our short-term credit holdings.
Liquidity
In order to enhance portfolio yield and performance, our goal is to maintain cash availability, while maximizing the maturity structure of the portfolio. We analyze current and historical cash flow data to determine patterns and identify trends that occur throughout the year.
Yield
The most important factor in determining the average performance of a short-maturity portfolio will be the length of its average maturity. The client's time horizon, liquidity requirements and loss constraints will determine the proper average maturity, or duration, of the portfolio. Once set, the duration would remain a passive decision and would only be adjusted in the event of a change in cash flow expectations. Active portfolio decisions would be employed in the management of yield curve and sector weightings. These are areas that we feel are exploitable and will add to portfolio performance over the long run.
AICC Long Maturity
AICC Investment approach for long maturity, core bond portfolios can be segregated into the following areas:
Duration Management
Similar too many bond managers, we believe that it is difficult to consistently make accurate long-term interest rate predictions. As a result, we generally maintain the duration of our portfolios close to their respective benchmark index levels. However, we also believe that opportunities occur periodically when short-term interest rate movements are more predictable and exploitable. Furthermore, interest rate movements are a factor in many other types of fixed income strategy decisions, such as yield curve positioning. We therefore have developed a short-term interest rate model designed to identify Federal Reserve policy changes.
Yield Curve positioning
Historically, the yield curve has a long-term relationship with the movement of the economy along the economic cycle. Our fundamental analysis compares the shape of the yield curve relative to our perceived strength of the economy. Value in the curve is measured using statistical measurements to compare historical averages.
Sector/Quality Management
Our fundamental research compares the yield premium received for accepting higher risk levels relative to the underlying strength of the economy. Value, again, is measured using historical averages based on the tendency for yield premiums to return to mean levels.
Security Selection
We use traditional fundamental analysis to search for companies with strong growth characteristics in industries that exhibit long-term stability. Our proprietary credit model concentrates on downside risk analysis, with an emphasis on principal preservation. Our value approach addresses reasonable price analysis and compares the pricing levels of similar companies.