RMB Capital Management

Overview

Our taxable fixed income strategy centers on capital preservation and income. We believe we can grow income in the long term by selectively purchasing large-issue bonds that offer low volatility.

Performance Objectives

  • Steady income from short- and intermediate-term bonds
  • Low total return volatility

Investment Approach

  • Fundamentally driven, relative value strategy
  • Bias toward corporate bonds

Portfolio Profile

  • Large, frequent bond issuers
  • U.S.-dollar-denominated, investment-grade bonds
  • Primarily bonds maturing in 10 years or less
  • Low turnover â€” focus on best issuers

Philosophy

With an eye on the long term, our fixed income philosophy focuses on researching, analyzing, and investing in a diverse universe of bond issuers. Through our fundamentally driven, value strategy approach, we aim to preserve capital and grow income.

Our taxable fixed income strategy is distinguished by three key tenets.

Quality

  • In our view, risk is underpriced when things are going well, and our analysis adjusts for this bias
  • We examine potential event risk, including regulation and shareholder activism

Liquidity

  • Larger companies, typically multiple $1B issues
  • Top 2/3 of universe by spread over the U.S. Department of Treasury yield curve

Concentrated Portfolio

  • Assures our clients’ assets are focused in our best ideas while still being adequately diversified
  • Enables us to thoroughly research each holding

Process

We have a disciplined and rigorous approach.

Idea Generation

  • Credit universe is screened on two metrics: the option-adjusted spread/risk-free curve and the market value of debt outstanding
  • Results are mapped into deciles, which are rank-ordered by size
  • Focus is placed primarily on the top five tightest deciles at the top end of the size distribution

Fundamental Analysis

  • Identify issuers with stable earnings streams and low likelihood of negative earnings
  • Examine financial ratios
  • Incorporate multiple sources of information, largely excluding credit agency rating data

Portfolio Construction

  • Equally weighted portfolio containing between 12 and 20 holdings
  • Low turnover; bonds typically held to maturity