Fixed Income Investment
The objectives for the fixed income portion of the portfolio are to provide current income and reduce portfolio risk. D&G’s approach to bond investing is straightforward and highly effective. The firm structures the core fixed income component of its balanced portfolios to minimize the two major risks associated with bonds: credit risk and interest rate risk.
To minimize credit risk with its core bond holdings, D&G invests only in U.S. Treasuries, government agencies, and investment grade corporate or municipal issues. To minimize interest rate risk, the firm employs a laddered, intermediate maturity strategy. As a general rule, all bonds purchased are non-callable, with maturities from 1 to 10 years, and are selling at or near par. Through selectivity and incremental adjustments in portfolio duration, D&G seeks to provide added value for its clients. This approach, which is also employed for fixed income-only portfolios, has produced excellent bond returns with low risk — far less risk than many more exotic approaches that use lower grade securities or attempt to anticipate interest rate fluctuations.
To supplement core bond holdings in its balanced or all-fixed income portfolios, D&G may also invest in preferred stocks, master limited partnerships, closed-end income funds, structured notes, REITs, non-US and unconstrained institutional share class no-load bond funds, absolute return strategies and income-oriented ETF’s.