Fixed Income Plus

The MB Fixed Income Plus Fund strives to provide a moderate real rate of return, primarily through income, by investing in a diversified portfolio of Canadian and American debt securities.  The Fund will only invest in high quality debt.  Returns in excess of interest income will be gained through currency allocation as well as duration, yield and sector management in each country.

McLean Budden practices active bond management strategies within a strict risk-control and screening regimen.  Employing a number of strategies allows us to ad value for our clients over market cycles.

Decision Making

The Fixed Income Team formulates investment strategy based on its opinion regarding six to twelve month outlook for inflation and interest rates.  This strategy is determined by analyzing economic and financial market research and evaluating views of McLean Budden's Asset Mix and Equity Teams.  The process produces targets for duration, credit, sector weightings as well as country commitments.

The key criteria used to structure the portfolio include:

·        inflation and inflationary expectations

·        monetary policy

·        economic growth expectations

·        spread premiums

·        shape of the yield curve

·        credit analysis of specific issuers

Portfolio yield is increased through higher commitments to provincial, state and corporate bonds.  Credit risk is controlled by maintaining strict diversification rules and by only buying corporate debt rated single A or higher.

Investment Process

Portfolio Composition

Substantial use of hard currencies (the U.S. dollar and Eurodollar) will be prevalent in an effort to protect investors from Canadian dollar depreciation.  The U.S. dollar in particular will make up a large portion of the Fund.

The use of non-U.S. foreign currencies will be minimized as only major currencies are considered and capital safety is the key objective.  Changes in the Fund's currency mix will be based on the safety of the Canadian dollar more than any other determinant.

The Fund will also increase the duration of the U.S. component, relative to Canadian bonds, to take advantage of a widening country yield spread, and vice versa if Canadian bonds are preferred.

While the U.S. does not have provincial bond equivalents, their corporate bonds often carry a higher yield than similar quality Canadian bonds.  Supranational credits (such as the World Bank) will also be used to add yield over government bonds.

The following are our currency and issue risk control ranges:

Number of Issues

The Fixed Income Plus portfolio will typically contain 50 to 100 issues with a larger amount more evident when corporate issues provide favourable risk-adjusted opportunities.

Research

The Fixed Income Group is organized along industry sectors with each member responsible for evaluating the credit worthiness of issuers within their particular sector. The Fixed Income Group is in constant contact with the three equity teams at McLean Budden to assist in determining the financial status of a firm.

Turnover Ratio

Turnover (purchases or sales as a percent of market value) will range between 100% to 150% per annum. McLean Budden's level of trading is highly influenced by the frequency and magnitude of changes in investment strategy.  The firm believes active trading is a secondary, but essential, component of our management style. 

Fees

Information not provided by fund manager.

HNW Fees

Information not provided by fund manager.

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