Fixed income

William Blair Core Fixed Income Strategy

The William Blair Core Fixed Income strategy seeks to outperform the Bloomberg Barclays U.S. Aggregate Index by employing a broad range of fixed-income sectors, including up to 10% in non-investment-grade holdings.

Why William Blair Core Fixed Income Strategy?

  • Offers a differentiated approach, seeking opportunities in bonds that other managers eschew because of size, credit quality constraints, or other institutional biases
  • Has a stable team that has worked together since 2006—before, during, and after the global financial crisis
  • Is designed to seek consistently strong risk-adjusted performance through a number of different market environments

Investment Philosophy

  • The strategy seeks to deliver "core" fixed-income portfolios that blend a high-conviction, actively managed approach to security selection with risk controls to potentially deliver consistent execution.
  • The investment team uses a best-ideas approach to security selection:
  • It seeks compelling value opportunities that arise from numerous factors: the presence of mega managers, institutional biases, complexity of analysis, and credit rating rigidities.
  • It employs systematic, time-tested approaches to capture compelling value opportunities: low-loan-balance mortgage-backed securities (MBS), global credit leaders, and "tier 1" asset-backed securities (ABS) issuers.
  • Risk controls seek to ensure consistent execution:
  • The investment team believes interest-rate-timing strategies are unreliable sources of performance, so duration is managed closely to benchmark, and yield-curve exposures align with the benchmark.
  • The investment team seeks diversified alpha sources.

Portfolio Construction Parameters

  • Risk objective: 100- to 125-basis-point tracking error versus the Bloomberg Barclays U.S. Aggregate Index
  • Duration and yield curve: plus or minus 10% of index’s duration; limited active yield curve positions dependent on perceived opportunity
  • Sector allocation: Two times maximum overweight to credit and MBS sectors; underweight Treasuries over market cycle
  • Currency: U.S. dollar
  • Risk discipline: maximum 10% high-yield issuers; maximum 1% overweight on investment-grade issuers; maximum 0.75% overweight to high-yield and emerging-markets issuers; strategic avoidance of agency debentures and CMBS; emphasis on liquid securities
  • Derivatives: futures, options, mortgage to be announced forward contracts (TBAs), CDs, and credit baskets for bona fide hedging purposes, subject to client guidelines
  • Treasury Inflation Protected Securities (TIPS): long-dated TIPS owned as protection against real or expected inflation

Portfolio construction parameters are subject to change.

Sep Account Mutual Fund SICAV CIT
  • Investment Process          detail

    Core-Fixed-Income-Strategy-chart


    Corporate Bonds: We seek bonds that offer the most compelling value opportunities through quantitative screens; leverage the firm’s human and quantitative resources; and seek to mitigate inherent risks by meeting with corporate-management teams.

    Mortgage-Backed Securities: We seek segments of the market that offer the most compelling value opportunities through quantitative screens, and we seek to mitigate inherent risks of pools by researching loan-level characteristics and identifying pools with maximum loan sizes at origination of $85,000 or $110, 000.

Sep Account Mutual Fund SICAV CIT
  • Management          detail

    Vincent_Chris_landscapeChristopher T. Vincent, CFA, Partner

    Chris is the head of William Blair’s fixed-income team and a portfolio manager for the firm’s Core Fixed Income, Intermediate Fixed Income, and Low Duration Fixed Income strategies. Before joining William Blair in 2002, Chris was a portfolio manager at Kemper Financial Services (and its successor firms) in Chicago for 14 years. In that role, Chris managed core and core plus fixed-income portfolios for institutional clients. He began his investment career in 1983 as a pension plan sponsor at Ralston Purina, a Fortune 100 company based in St. Louis. Chris is a CFA Charterholder and a member of the CFA Institute and the CFA Society of Chicago. He is actively involved in the leadership of the CFA Institute and the CFA Society of Chicago. Chris was the chairman of the CFA Society of Chicago’s board of directors for the 2014-2015 fiscal year. In the past, Chris has served on the CFA Institute’s annual conference advisory group and has served as vice chair and secretary/treasurer for the CFA Society of Chicago’s board of directors. Education: B.S.B.A., University of Missouri; MBA, Saint Louis University.

    Sularz_Paul_landscapePaul J. Sularz

    Paul is a portfolio manager for the William Blair Core Fixed Income, Intermediate Fixed Income, and Low Duration Fixed Income strategies. Before joining William Blair in 2006, Paul was vice president at J.P. Morgan Securities, Inc. from 2004 to 2006, where he was responsible for trading specified pool agency mortgage-backed pass-through securities for the firm’s primary broker/dealer located in New York City. Before his position at J.P. Morgan, Paul was a director at Banc One Capital Markets, Inc. within the asset-backed and mortgage-backed securities group from 1995 to 2004, where he managed the firm’s mortgage-backed securities trading desk in Chicago. Paul began his career in 1990 as an assistant portfolio manager at Kemper Asset Management Company within the fixed-income institutional asset management division. Paul is a member of the CFA Institute and CFA Society of Chicago. Education: B.A., economics, University of Illinois at Urbana-Champaign; MBA, concentrations in finance, econometrics and statistics, University of Chicago’s Booth School of Business.

Sep Account Mutual Fund SICAV CIT
  • Disclosure          detail

    This material is provided by William Blair for informational purposes only and is not intended as investment advice. Any discussion of particular topics is not meant to be comprehensive and may be subject to change. Any investment or strategy mentioned herein may not be suitable for every investor. Factual information has been taken from sources we believe to be reliable, but its accuracy, completeness or interpretation cannot be guaranteed. Information and opinions expressed are those of the author(s) and may not reflect the opinions of other investment teams within William Blair. Information is current as of the date appearing in this material only and subject to change without notice.

    Risk
    The strategy’s returns will vary, and you could lose money by investing in the strategy. Investing in the bond market is subject to certain risks including market, interest-rate, issuer, credit, and inflation risk; investments may be worth more or less than the original cost when redeemed. Current conditions may result in a rise in interest rates, which in turn may result in a decline in the value of the fixed income investments held by the strategy. Convertible securities may be called before intended, which may have an adverse effect on investment objectives. The strategy’s investments in below investment grade securities may have additional credit risk. In some cases, below investment grade securities may decline in credit quality or go into default. High-yield, lower-rated, securities involve greater risk than higher-rated securities; portfolios that invest in them may be subject to greater levels of credit and liquidity risk than portfolios that do not.