We often recommend to our clients that a portion of their assets be invested in fixed income assets or bonds. Bonds reduce a portfolio’s excess movements up and down (volatility) and generate interest payments to satisfy a client’s income requirements.
Baldwin’s fixed income philosophy is rather straightforward. We do not attempt to predict interest rate movements.
Instead, we purchase and maintain a high quality portfolio of medium duration bonds.
Taxable (government, agency and corporate) and tax-exempt (municipal) bonds are considered, depending upon a client’s tax status and overall market conditions.
In many of our fixed income portfolios, bonds mature every year. Replacement bonds may be purchased with a maturity date beyond the longest existing in the portfolio. The technique is known as laddering maturities. Laddering maturities insures that a client’s holdings will better track the long-term direction of interest rates. Alternately, the proceeds from the bonds maturing annually could be invested in different assets or used for other purposes, depending upon client circumstances.
In sum, at Baldwin we are adept at structuring and managing conservative fixed income portfolios.