U.S. Fixed
Income

Xponance’s Yield Advantage strategies are grounded in the belief that yield is the most reliable tool for generating alpha and optimizing return per unit of risk. The goal of our philosophy is to deliver long-term results that maximize the contribution of yield to total return, while preserving capital. Typically, this yield advantage is derived through credit, optionality, and other spread products, but can be attained through duration based on the stage of the business cycle.

We also believe that the best way to maximize yield’s return contribution is with an investment process that has multiple levers for success. Consistent with this view, the Yield Advantage process works to extract alpha contributions from three areas: Quantitative idea generation, fundamental credit research, and macro insights. The use of multiple alpha sources diversifies our performance and increases its reliability.

Macro Positioning

Portfolio managers leverage firm-wide macro insights to position portfolio’s duration opportunistically based on:

  • Yield Curve Shifts/Flattening
  • Rate forecasts
  • Non-traditional market

Quantitative Idea Generation

Quantitative modeling generates insights on issuer and sector pricing anomalies including:

  • Credit Quality
  • Valuation
  • Spreads

Fundamental Credit Research

Research analysts conduct fundamental work that forms the foundation for security selection and sector rotations including:

  • Annual Industry reviews
  • Quarterly Earnings/Credit reviews
  • Monthly Portfolio reviews
  • Weekly Holdings reviews

Thematic Elements of the Business Cycle

* Please note that the relative performance of the sectors shown may vary when the Fed shifts policy direction within each of the archetypal monetary policy phases

Assessing Portfolio Construction Constraints

Fixed income risk budget formulation— macro conditions, valuation, and opportunity set are interrelated when assessing portfolio construction constraints

Assessing Portfolio Construction Constraints

Fixed income risk budget formulation— macro conditions, valuation, and opportunity set are interrelated when assessing portfolio construction constraints

U.S. Fixed Income Strategies

Opportunistic Core

A yield maximizing total return bond strategy with primary investment objectives of current income and capital preservation. A secondary investment objective is long-term capital appreciation. Bloomberg Aggregate benchmark.

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Limited Duration

A laddered, credit intensive, low turnover strategy, that typically significantly underweights treasury securities that in turn reflects a consistent yield advantage relative to the benchmark. The relatively short average life seeks to dampen mark to market volatility and effectively lets book yield win.

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Intermediate Government/Credit

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