Our Balanced Product is a blend of our Equity Product and Fixed Income Securities. Asset allocation is tailored for each client.
Fixed Income Decision Process
FFIC’s approach to fixed income portfolio management
is to jointly develop with the client future objectives and
income requirements. Fixed income portfolios are managed
to maximize total return while emphasizing quality, marketability
and the maturity structure. While various stages of a
business cycle will determine the duration of a portfolio, the
firm’s philosophy is toward intermediate maturities in order
to reduce market risk.
The value added by the fixed income portion of a balanced
account is its ability to provide a stable flow of current
income that will not vary over the life of the securities. This
stability accomplishes two purposes. First, the maturity
schedule for return of principal can be structured to reduce
volatility, and, if required, to accommodate a future need
for cash. Second, the annual cash income stream can be
reserved to meet any current expense requirements or
unexpected need without disturbing the equity portion of the
portfolio at an inappropriate time.
While the majority of First Fiduciary’s fixed income
investment activity relates to balanced accounts, we do
provide services for clients whose portfolios are solely
invested in fixed income.
Equity Decision Process
See Equity Composite Decision Process page.
Monitoring Our Positions
After a security has been purchased for our portfolios, we
continuously monitor the company through largely the same
information sources that were used in making the buy decision.
As events transpire at a company and in the market,
we will periodically re-evaluate our target price in response.
If conditions warrant, we will implement our sell discipline
and exit the position for a variety of reasons.
A security will be partially or completely sold out of our portfolios
for several reasons:
| |
• The security’s credit rating is downgraded below investment grade
• It has, through appreciation, become an excessively large
position in the portfolio
• The security has met or exceeded our target price based on
our valuation methodology
• Other more attractively valued securities become available
• If a company’s fundamentals deteriorate, we will re-evaluate
the security and may decide to exit the position.
• There is a need for cash in a specific portfolio |
|
