Rockwood Capital’s approach to managing fixed income portfolios begins with the belief that high-quality bonds should be the foundation of one’s investment program. Outstanding results can be attained without compromising the integrity of the portfolio by taking on excessive risk. Managing risk and identifying value are essential elements of our approach and key to our focus on relative valuation. While we utilize duration, a most powerful tool, in the active management of fixed income portfolios, it is a stable income stream that cushions volatility and ultimately leads to superior risk-adjusted returns.
Rockwood Capital employs a consistent, disciplined, team-oriented approach to fixed income portfolio management, research and trading. Our investment strategy utilizes a combination of both top down and bottom up analyses in the formulation of our investment decisions, which are developed and implemented by the fixed income portfolio management team. Economic research provides the foundation for our systematic five-stage portfolio modeling and risk management process. Individual security selection is secondary to overall portfolio structure and we gradually adjust the interest rate sensitivity, maturity structure and sector allocation of portfolios to preserve the real purchasing power of invested capital and enhance long-term total returns. For every client, we prudently manage their portfolio’s risk profile in terms of credit quality, liquidity and stability of cash flows.
Inherent in the Trade Execution stage, liquidity analysis is performed to ensure that all trading activity is executed in a timely and efficient manner with minimal transaction costs. Only highly marketable, publicly traded securities are considered, and all transactions are implemented through a disciplined competitive bidding process. We also rely extensively on block trading techniques to execute shifts in portfolio structure simultaneously across client accounts having similar guidelines.
Optimal for clients seeking a core fixed income approach that maximizes the diversification benefits of high quality fixed income assets relative to equity investments. Portfolios are invested in highly liquid, investment grade securities, with an average credit quality rating of AA. Portfolio duration will generally be maintained in a range of +/-30% of the designated broad market benchmark.
Junk bonds, derivatives and currency bets are not our style. We firmly believe that exceptional long-term performance can be attained without sacrificing quality. We also recognize that high quality bonds offer superior diversification relative to equity investments. For every client portfolio, we consistently maintain a superior risk profile in terms of credit quality, liquidity, and stability of cash flows.