When suggested by the client’s Investor Profile, Goelzer determines a suitable allocation to fixed income securities. Such allocations may serve multiple purposes:
Reduction of Portfolio Volatility
- Bonds prices have low correlations to movements in stock prices. Such trend divergence contributes to lower volatility.
- Goelzer’s focus on bonds of short to intermediate maturity reduces price volatility caused by interest rate movements.
- An emphasis on high-quality issues reduces exposure to credit (default) risk, further reducing volatility.
- For clients with income needs, Goelzer may extend maturities to support greater stability of the income stream.
- In low-yield environments, Goelzer may combine bonds of shorter maturities with those of longer maturities. This allows the client to benefit from higher yields on longer maturity bonds while being in a position to participate as yields rise in the future.
- Liquidity needs are addressed through investments in very marketable high-quality securities maturing in three years or less.
Fixed income allocations may include investments in:
- U.S. Treasury Notes
- Investment Grade Municipal Bonds
- U.S. Government Agency Obligations
- U.S. Government-Backed Mortgage Pools
- Investment Grade Corporate Bonds
- Treasury Inflation-Protected Securities
- High-Yield Corporate and Municipal Bonds (As Appropriate)