While fixed income investments may not stir investor emotions in the manner that equities do, they can be the anchor to an investment portfolio with consistent long-term wealth creation. Fixed Income investments provide predictability with a steady stream of income and capital preservation that can complement higher-risk assets in your portfolio.
At Alpine Hill Advisors, our customized active strategy can provide diversification, risk management and customizable client portfolios. Our focus is on generating after-tax returns toggling between corporate and municipal bonds depending on an individual client’s tax bracket and individual risk tolerance. By executing on this approach this creates opportunities for increased after-tax returns relative to benchmarks and bond funds.
With individual bonds we can be nimble and flexible when there are certain shocks to interest rates or macro-economic events. We are not forced sellers and can take advantage of price dislocations. We deploy a barbell strategy, offering an allocation of short-term bonds and long-term bonds to help us manage the fluctuations in interest rates. Historically, short terms bonds have less price volatility than long-term bonds. If rates rise, we take the opportunity to reinvest the proceeds of short-term maturing bonds and roll down the interest rate curve to capture the higher rates.
We provide an institutional-level approach to sourcing bonds with a uniquely individualized client experience. We have spent years cultivating relationships across the fixed-income market place that help us get reliable price execution and liquidity. The benefit of working with a firm like Alpine Hill is that when we buy bonds, we know exactly who the end client is and what their needs are. The bonds we buy show up directly in our clients’ accounts providing complete transparency into what our clients own.
Individual fixed income can provide permanence and definition in our client portfolios. We are able to model out bond ladders that provide fixed streams of income for our clients. This is especially beneficial for clients who are living off a fixed income or are in retirement. With our focus on planning, defining our clients preferred income level we are then able to create a bond portfolio that provides a synthetic paycheck. This is different from bond funds and bond ETFs that don’t often truly possess bond-like characteristics of a set maturity date and income stream.
This active and controlled approach can often eliminate the gyrations and noise in the market. We continually measure, monitor, and compare this risk/reward relationship between different bonds. The characteristics we review include yield, yield-to-maturity, yield-to-worst, coupon rate, duration, and rating, to name a few.
A successful fixed income portfolio requires more than a ‘set and forget’ buying strategy. It takes active management by an advisor with real fixed income experience. Matching clients’ complex needs with a proper fixed income allocation requires a flexible, dynamic approach. Our process seeks to accomplish customization, tax management, transparency and predictable income streams.
Thank you for reading,
Brandon
Brandon Pacilio is President of Alpine Hill Advisors, a Westport, CT Registered Investment Advisor firm. If you would like to contact the author to discuss individual fixed income investing, please e-mail him at bpacilio@alpinehilladvisors.com or call (203) 429-0510.
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The information provided is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor’s particular investment objectives, strategies, tax status or investment horizon. You should consult your attorney or tax advisor.
No investment strategy or risk management technique can guarantee returns or eliminate risk in any market environment. All investments include a risk of loss that clients should be prepared to bear. The principal risks of Alpine Hill strategies are disclosed in the publicly available Form ADV Part 2A. Although fixed income generally present less short-term risk and volatility risk than stocks, fixed income does contain interest rate risks, the risk of issuer default, issuer credit risk, liquidity risk, and inflation risk.
Alpine Hill Advisors LLC (“Alpine Hill”) is a registered investment advisor. Advisory services are only offered to clients or prospective clients where Alpine Hill and its representatives are properly licensed or exempt from licensure. Please visit our website https://alpinehilladvisors.com for important disclosures.
