STAGE 1: Top Down Analysis
GLOBAL ECONOMIC DATA: Monitoring interest rate movements and key economic data on a daily basis, using outside sources such as Bloomberg, BCA, JP Morgan, Morgan Stanley and Ned Davis.
QUANTITATIVE RESEARCH: Understanding the empirical evidence showing the relationships between various economic factors, as it pertains to fixed income performance.
FIRSTHAND RESEARCH: Using an extensive network of dealers including CIBC World Markets, BMO Capital, TD Newcrest, Scotia Capital, Desjardin to gain different perspectives and understand the institutional flow of funds and product offerings.
STAGE 2: Fixed Income Strategy
Based on our top-down analysis McLean & Partners adjusts its fixed income strategy for future performance.
The strategy consists of three components:
ASSET ALLOCATION: The tactical asset allocation decisions are where we can add the most value when it comes to fixed income investing. Based on our top-down analysis we then allocate portfolios with varying percentages in cash and short term investments, government bonds, corporate bonds, and preferred shares.
CREDIT QUALITY: Now we are finally ready to begin determining the proper investments from the opportunities in the marketplace. We take into account the sectors and industries of the issuers, their credit quality and the liquidity of the investments.
INTEREST RATES: When we begin to look at the opportunities within each asset class outlined above, we make tactical calls based on interest rates. Where is the best value on the yield curve? What duration do we want, more importantly, what’s being priced by today’s market? What type of exposure should we have in Real Return Bonds? In the preferred market we adjust our exposure accordingly between floating rate, fixed resets, retractable and perpetual preferred shares.
STAGE 3: Active Management
McLean & Partners accesses opportunities in the fixed income marketplace through our extensive institutional network. Here again our close relationships with CIBC World Markets, BMO Capital, TD Newcrest, Scotia Capital, Desjardin provide access to deal flow critical to the development of a top performing fixed income portfolio.
We use a sophisticated bond program from Advantage Data to monitor all of our corporate holdings on a spread, yield to maturity and price basis. We monitor these on a daily basis and in conjunction with our top-down view to make buy/sell and asset allocation decisions.
Opportunity and Risk Management: The fixed income portfolio is a continuous cycle of top-down analysis, fixed income strategy adjustments, and active management of portfolio for the ever changing marketplace.
If you are interested in learning more about our Fixed Income Research Process, please contact
Russ MacKay at (403) 234-6103 or rmackay@mcleanpartners.com
Disclaimer: McLean & Partners provides independent research and advice to its clients on a fee for service basis. The company is not engaged in any investment banking, underwriting, consulting or financial services activities on behalf of any companies. McLean & Partners’ research reports are for the sole purpose of managing client portfolios on a managed and non-managed basis. The company may engage in proprietary trading to invest surplus corporate cash balances. The opinions expressed herein are those of the author and do not necessarily represent those of McLean & Partners Wealth Management Ltd. The information contained in this report has been obtained from sources believed to be reliable, however, we cannot represent that it is accurate or complete. McLean & Partners Wealth Management Ltd. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada.
