Core fixed income
Our core fixed income strategy seeks to capture market inefficiencies predominantly through sector allocation and security selection decisions in the context of robust risk management controls. We seek to minimize volatility through strict limits on relative sector exposures and duration decisions and manage idiosyncratic risk through individual issuer limits. Through our consistently applied philosophy and process, we seek to generate above market returns over market cycles with volatility of performance at or below our primary index.
Short-term fixed income
Our short-term fixed income strategy seeks to benefit from opportunities arising from changes in interest rates, volatility, credit and sector spreads, and the shape of the yield curve in constructing a portfolio that seeks to outperform the Barclays U.S. 1-3 Year Government/Credit Index over time.
Our process is based on the belief that fixed income markets are inefficient and active management which emphasizes sector and security selection can generate superior long-term results.
Tax-free fixed income
HighMark's intermediate tax-free fixed income strategy seeks to deliver a high-quality, well-diversified portfolio that provides a high level of current income that is exempt from federal and California state income taxes. The process is based on our conviction that an intermediate-term portfolio captures a substantial amount of the available yield in the tax-exempt market while providing a lower exposure to interest rate and price volatility than longer-term portfolios. The strategy is available in both national and state-specific tax-exempt implementations. Portfolio duration is controlled via HighMark’s analysis of macroeconomic projections, relative sector value versus Treasury yields, and federal and state-specific political considerations that may impact fiscal policy.
Income advantage – Seek to maintain a durable income advantage as compounding interest is an essential component of value-added fixed income investment returns.
Fundamental research and mean reversion – Independent, in-depth fundamental research helps us capture an income advantage and have confidence in our investment decisions during periods of volatility. Mean reversion is a critical component in developing investment ideas and maintaining a sell discipline.
Asymmetric risk avoidance – Given that fixed income instruments may provide limited upside and maximum downside return potential, careful attention to issue- and issuer-level analysis is critical to portfolio construction.
Risk management emphasis – Control risk by using a consistent, disciplined investment process as well as maintaining strict limits on individual issuer exposure, sector allocation and duration positioning.