High Quality Short Duration 1-3 Year
The management team seeks to invest in high quality, low-volatility alternatives to low-yielding money market and government debentures. We target short-term bonds that we believe to be of the highest quality with low credit and event risk. The team seeks to protect principal and generate a consistent source of income and liquidity. Traditional short-term, low volatility mortgage- and asset-backed securities are emphasized because of their historical substantial yield premium versus Treasury and agency notes.
|Asset Class:||US Fixed Income|
|Inception Date:||January 1, 1992|
|Average Credit Quality:||AAA|
|Yield to Maturity:||4.4%|
|Modified Duration (years):||1.5|
|Average Maturity (years):||1.6|
|Duration Target:||1.25 - 2 years|
|Benchmark:||ICE BofA 1 – 3 Yr Government|
Below Peer Group1
ULTRA HIGH CREDIT QUALITY
'AAA' & Government
Investment Performance (%)
as of September 30, 2022
|Quarter||1 Yr||3 Yr||5 Yr||10 Yr||Since Inception|
|High Quality 1-3 Year (Gross)||-1.13||-3.93||0.00||0.99||0.87||3.47|
|High Quality 1-3 Year (Net)||-1.21||-4.27||-0.35||0.64||0.51||3.11|
|ICE BofA 1-3 Yr Government||-1.56||-4.86||-0.48||0.57||0.61||3.27|
Periods greater than one year are annualized. Inception date is 1/1/92.
EMPHASIS ON SECURITIZED SECTORS
Sector Allocation (%)
as of September 30, 2022
Cash allocation included in U.S. Treasury. Percentages based on weighted average of composite portfolios.
STANDARD DEVIATION (%)
As of September 30, 2022
Annualized gross of fee returns. Standard deviation (risk) measures the dispersion of returns (historic volatility.) 1Peer group: products reporting a 1-3-year maturity benchmark within the eVestment US Short Duration Fixed Income Universe (includes products primarily invested in short duration, investment grade debt across multiple sectors). Volatility measured by the 10-year standard deviation of product returns. The Composite’s 10-year low volatility measure ranked in the top 6th percentile among 94 strategies.
EMPHASIS ON HIGHEST QUALITY ISSUES
as of September 30, 2022
- 25+ years managing high-quality bonds
- $1.1 billion in short duration assets
- Focus on securitized debt instruments
- Custom portfolio tailored to investment needs
High Quality (AAA) Ultra-Short SecuritizedSeptember 30, 2022
High Quality Short Duration 0-2 YearsSeptember 30, 2022
High Quality Short Duration 1-3 YearsSeptember 30, 2022
High Quality Short Duration 1-5 YearsSeptember 30, 2022
Fixed Income Market ReviewSeptember 30, 2022
*Source: eVestment. Percentages may not sum to 100 due to rounding. Cash allocation included in Government weighting, which includes government debentures and mortgage securities. Percentages based on weighted average of composite portfolios.
Average Credit Quality calculated as of current quarter-end by Atlanta Capital. The Strategy’s overall average portfolio credit quality is not assigned by an independent credit agency. Rather, it is calculated by the investment adviser by determining the average credit quality of the Strategy’s investments (including cash held in government money market funds) based on their market value. If individual securities within the portfolio are rated differently by the independent credit agencies, the higher rating is used to calculate the average portfolio credit quality. Unrated securities are included based on internally assigned ratings. Average credit quality may change over time.
Ratings are based on Moody’s, S&P or Fitch, as applicable. Credit ratings are based largely on the rating agency’s investment analysis at the time of rating and the rating assigned to any particular security is not necessarily a reflection of the issuer’s current financial condition. The rating assigned to a security by a rating agency does not necessarily reflect its assessment of the volatility of a security’s market value or of the liquidity of an investment in the security. If securities are rated differently by the rating agencies, the higher rating is applied. Ratings of BBB or higher by Standard and Poor's or Fitch (Baa or higher by Moody’s) are considered to be investment grade quality.
Important Additional Information and Disclosures. This information is intended for use by institutional investors only and may not be suitable for all investors. This information is for illustrative purposes only and should not be considered investment advice or a recommendation to purchase or sell any specific security or invest in a specific strategy. The material is based upon information that Atlanta Capital considers to be reliable, however no assurances are provided and Atlanta Capital has not sought to independently verify information taken from public and third party sources. Composite characteristics are based on a weighted average of composite portfolios; actual security holdings and allocations may vary for each client based on client guidelines. There is no guarantee that a particular client’s account will match the results shown.
The High Quality Short Duration 1-3 Years Composite includes all fully discretionary separate accounts invested in debt securities having average effective maturities of one to three years. The investment objective is to maximize total return while minimizing volatility and preserving capital. Accounts in this composite invest in fixed income securities having a debt rating of A or above from nationally recognized rating services and may invest in obligations issued or guaranteed by the U.S. Government, its agencies or its instrumentalities, and mortgage-backed and asset-backed securities. Low-volatility collateralized mortgage obligations (CMOs) and asset-backed securities are used to improve yield and minimize event risk. Corporate bonds are excluded due to their inherent credit and event risk and higher volatility. The composite’s duration typically ranges between one year and two and one-half years.
The benchmark for this strategy is the ICE BofA 1-3 Year Government Index, which includes securities in the Government Index with a maturity from one up to (but not including) three years. The 1-3 Year Government Index includes Treasuries (i.e., public obligations of the U.S. Treasury) and agencies (i.e., publicly issued debt of U.S. Government agencies, quasi-federal corporations, and corporate or foreign debt guaranteed by the U.S. Government). Strategy deviations from the benchmark may include but are not limited to such factors as active management, exclusion/inclusion of securities held/not held in the index, over/underweighting specific sectors or securities, and/or client constraints. The index is unmanaged and does not incur management fees, transaction costs or other expenses associated with managed accounts. It is not possible to directly invest in an index.
Performance reflects reinvestment of all income and capital gains. Composite returns and market values are reported in U.S. dollars. Gross-of-fee returns are presented before management and custodial fees but after all trading expenses. Net-of-fee returns are calculated by reducing the monthly gross-of-fee returns by the highest management fee charged to clients holding only fixed income assets. This fee is 0.35% annually. Clients with multiple portfolios representing different asset classes may be charged aggregate fees at the relationship level. These fees may exceed 0.35% annually. Other expenses will reduce a client’s returns. Actual management fees incurred by clients may vary. Advisory fees for all investment styles are stated in Part 2 of Atlanta Capital’s ADV, which is available upon request.
Investing entails risks and there can be no assurance that Atlanta Capital will achieve profits or avoid incurring losses. Past performance does not predict future results.
Atlanta Capital is part of Morgan Stanley Investment Management, the asset management division of Morgan Stanley.