A value-driven philosophy

We believe long-term performance and downside protection in fixed income investing is enhanced through a relative value discipline that is applied with:

• Active analysis
• Superior information systems
• An evolved trading methodology.

Your fixed income account is managed to add value above the benchmark index in accordance with your objectives and investment guidelines. This is done by emphasizing relative value opportunities within sectors and through issue selection. Our investment strategy has been structured to identify those opportunities that we believe can drive outperformance through various market environments.

Our process was developed to be repeatable. It is a time-tested investment approach that has remained consistent since our inception, even as we add advanced tools to make the identification of investment opportunities more efficient.

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We believe the ongoing integration of deep and experienced fundamental research with our proprietary valuation tools defines and differentiates our process. Over time, this process has allowed us to add value by discovering undervalued sectors and securities (and avoiding those that are overvalued). It's an approach we expect to work regardless of the market environment and one that enables us to better identify value along the yield curve.

The approach we employ is also team-based. The opinions of the entire investment team – which includes analysts, traders, and portfolio managers – are taken into consideration when defining portfolio structure. Based on the research and output of our analysts, we then select the securities within the targeted sectors that we believe will offer you the best relative value. This process also results in greater accountability while leveraging the strengths of our open-architecture environment.

Risk management wraps our process, with daily monitoring to ensure guideline compliance. Prior to implementation, portfolio ideas are screened utilizing our proprietary risk management, measurement, and compliance system: T.E.A.M. ( Track, Evaluate, Analyze and Manage). This helps ensure that desired sector allocation, ratings attributes, and contribution-to-duration characteristics are achieved and in compliance with your guidelines.

Our disciplined, repeatable process is designed to add value through:

• Yield curve positioning
• Duration construction decisions
• Sector and quality allocations
• Individual security selection
• Trading, exclusively in the cash market
• Portfolio risk management built into every stage of the process

We place emphasis on the preservation of your capital. We strictly adhere to risk controls, which are integrated throughout the investment process.

The team maintains over 50 years of historical interest rate data which is inputted into our horizon and breakeven analysis tools. We use this to analyze the risk-reward profile of various portfolio structures given a series of potential shifts in the yield curve. Statistical and regression analysis techniques complement the investment team's qualitative views as we assign probabilities to various yield curve scenarios.

Our proprietary TEAM (Track, Evaluate, Analyze and Management) system is used to analyze the structure of our portfolios and their inherent risks relative to the benchmark index and for compliance with investment guidelines. The risks we analyze include:

TEAM decomposes portfolios by sector and security weightings, maturity, and duration structures, to analyze yield curve and interest rate risk versus indices, coupon distribution, and ratings categories both on an absolute basis and relative to the benchmark. Portfolios are managed to a tight duration band as we do not believe market timing to be a highly predictable way of addition value over the long run.

TEAM's risk management capabilities are further enhanced by the compliance module and integrated with a “what-if” module, which allows us to manage risk within the bounds of our client's customized compliance requirement. The “what-if” allows portfolio managers to take into consideration customized client investment guidelines, alternative benchmarks, recalculated analytics and more, before we actually execute. Accordingly, all purchase and sell decisions are only executed after full consideration within a portfolio and risk management context.

TEAM is fully integrated with Advent Axys, our portfolio accounting and performance calculation system and with Bloomberg Financial Systems for up to date analytical information.

As a firm, we have a dedicated team of client guideline compliance and risk management analysts who meets with the investment professionals as part of our portfolio review and control process.