Medium-grade Fixed Income

Our distinctive, blended fixed income approach seeks to outperform broad investment grade and high yield indices in the long-term (3, 5, 10-year, etc.). We believe this serves as an innovative Core-plus alternative. Our approach focuses on US corporate bonds, Treasuries and "busted" (or out of the money) convertible bonds. The investment process employs an integrated bottom-up, top-down approach. The process emphasizes uncovering attractive valuation opportunities based upon fundamental perspectives. Overlaying the bottom-up approach is a comprehensive understanding of the economic, political and social characteristics that influence the capital markets. The bottom-up security selection process focuses on crossover credits (mostly BBB & BB with some B-rated). In order to develop the firm's fundamental perspective on a security, the management team utilizes several means including rating trend analysis, yield spread analysis, and liquidity analysis. The strategy does NOT utilize derivatives, structured products (asset-backed, mortgage-backed), or securities rated below single-B. Portfolios will normally be relatively duration neutral (+ or - 10% to benchmark), with an average quality of BBB or higher and a maximum 50% weighting in BB or B-rated debt. As of April 30, 2008, portfolios had an average quality of BBB+.

Most clients choose to benchmark the product against a traditional broad market index such as the Lehman Aggregate Bond index.  However, other clients have chosen to utilize a hybrid benchmark for performance measurement, such as 60% Lehman Gov't/Credit & 40% Lehman Ba-B index.

Our fixed income product inception is January 1990.  As of April 30, 2008, GW Capital managed $297.7 million in the Medium-grade Fixed Income product.