Taxable Fixed Income Strategies

Taxable Fixed Income Strategies

The Vanward Taxable Fixed Income Strategies construct portfolios of long-term, high-yielding credits by combining our distinctive valuation framework and exhaustive credit review criteria. Credit valuations are frequently divorced from their underlying fundamentals and subject to unjustifiably high levels of volatility, an inefficiency that affords the opportunity to increase fixed income returns through active management. Our value-based, disciplined investment process aims to:
- Conserve assets by conducting independent investigation
- Only invest in credit when a safety margin is present.
- Drive portfolio construction through value creation
- Adopt a long-term perspective
- Encourage a culture of openness, process discipline, and debate

Investment Criteria:
We construct our taxable fixed income portfolios bond by bond, using fundamental analysis and a proprietary valuation framework to screen the market for potentially compelling values. Then, we acquire credits with a margin of safety* that varies based on the type and rating of the bond and defines a price cushion that we believe will define an attractive price for the bond over the lengthier term, taking into account the cyclicality of credit markets. Repeating our investment procedure, we construct portfolios of high-yielding, long-term debt securities.

We intend to acquire long-term credits that satisfy the following investment criteria:
- Durability: The issuers in our portfolios are required to have a sustainable revenue model and/or collateral. In addition, we evaluate the company's resilience to a variety of regulatory and economic disruptions.
- Transparency: The issuer must operate with a business model and financial structure that can be identified and comprehended. Less likely will we be to invest in the issuer if its business model and capital structure are more intricate.
- Management: Strong management is essential for identifying a durable credit, and we identify management teams that maintain a balanced stance towards all capital providers.
- Structure: It is crucial that the issuer can generate sufficient internal funding to sustain its capital structure. We confirm that the issuer does not have excessive debt given the inherent volatility of cash flows, nor does it have an unhealthy dependence on capital markets for funding.

*We believe a margin of safety exists when we can mitigate both business risk (our business, financial, and management criteria have been met; there are sustainable competitive advantages) AND price risk (when we believe there is a significant discount to intrinsic value at the time of purchase — we aim to purchase at 75% or less of our estimate to intrinsic value).
-Investing in the bond market is subject to certain risks, including market, interest-rate, issuer, credit, and inflation risk; when redeemed, investments may be worth more or less than their initial cost.