FIXED INCOME SOLUTIONS

Transcription

1 FIXED INCOME SOLUTIONS OCTOBER, 2013 John Donovan, Head of Fixed Income and Trading Chris Gunster, Head of Fixed Income Portfolio Management David Litvack, Head of Tax-Exempt Fixed Income Research Jessie Harris, Head of Taxable Fixed Income Research John Donovan Bonds, or fixed-income, when included in a well diversified investment portfolio, can help investors reach their financial objectives. Combined with stocks and other securities in a portfolio, bonds can help reduce risk, provide reliable income, add stability and preserve principal. But there s more to it than simply buying bonds. In the broad fixed-income universe there are many factors to consider: security type, duration, yield, government versus corporate, taxable versus tax-exempt, and domestic versus foreign. An effective bond portfolio is one built to meet the goals of an individual investor, and one flexible enough to adapt as those goals, and market conditions change. That requires a team of dedicated professionals, working together. Chris Gunster So, when we are constructing a portfolio we take your objectives and your needs and marry that up to the available securities that are out there and then as we are going through the process we monitor the portfolio in terms of market changes or changes in our viewpoints that would lead us to change the portfolio in a meaningful way. We'll take into consideration anything that the client would like. If the client wants a lower duration than we're currently offering, we'll do that. If they want a higher risk profile, we'll do that, as well. So it's really uniquely designed to fit the client's needs, as opposed to just pushing them into a broader solution. Another option for bond investors is to consider Common Trust Funds, or CTFs. As with mutual funds, CTFs involve multiple investors pooling their capital under the control of a single trustee, in this case, Bank of America. Depending on the investors needs, CTFs can offer benefits such as diversification and professional management, with fewer management fees and regulatory constraints than with some other investments. Investment products: Are Not FDIC Insured Are Not Bank Guaranteed May Lose Value Please see back page for important information.

2 One of our other competitive advantages is our holistic approach to wealth management. So whether we're talking fixed income or equities, all of it revolves around your wealth management plan. In addition, we are benchmark agnostic. So what we try to do is we try to look at where we think interest rates are going, provide our strategy, regardless of the benchmark returns. Client contact is also customized. So whether the client wants to contact the fixed income team directly or through a P.M., that's available, as well. David Litvack One of the things that I was pleasantly surprised about when I joined U.S. Trust is that the strategists had the opportunity to interact with our chief investment officer and chief macro strategist, in terms of their view of the world, and that's been very important in informing our views on the market. Jessie Harris We certainly take the top-of-the-house view of the market and we marry that with what we see from the bottom-up perspective with respect to industries and the companies that we cover. And having that holistic approach enables a portfolio manager to make decisions for their clients. David Litvack We do our own research, we don t simply look at the ratings, and I think that s important because the ratings can often be stale and not reflective of the current conditions in the market. We actually have research analysts who sit on the trading desk, so that as traders buy bonds, they could look at them to make sure that they meet our clients' investment objectives. John Donovan Information is constant and the markets move very quickly. Because our trading desk and our credit research group are so closely aligned we re able to react quickly and take advantage of these opportunities. 2

3 So, our philosophy is this: rather than taking a passive approach, we re taking an active approach to managing these portfolios. So, what this means for clients is, they don't always have to reset their portfolios. It s being managed on a constant basis with the best and brightest ideas from U.S. Trust. 3

4 IMPORTANT INFORMATION: Opinions expressed herein are those of the featured participants, U.S. Trust, and may differ from those of Bank of America Corporation and its affiliates. The information presented in this video is for discussion purposes only and is not intended to serve as a recommendation or solicitation for the purchase or sale of any type of security. This video does not constitute investment advice and is issued without regard to specific investment objectives or the financial situation of any particular recipient. This video is designed to provide general information about ideas and strategies. Always consult with your independent attorney, tax advisor, investment manager, and insurance agent for final recommendations and before changing or implementing any financial, tax, or estate planning strategy. Investing involves risk. There is always the potential of losing money when you invest in securities. All asset classes are not suitable for all investors. Each investor should select the asset classes for them based on their goals, time horizon and risk tolerance. Sector and asset allocation recommendations should be considered in the context of an individual investor s goals, time horizon and risk tolerance. Not all recommendations will be suitable for all investors. Investing in fixed income securities may involve certain risks, including the credit quality of individual issuers, possible prepayments, market or economic developments and yields and share price fluctuations due to changes in interest rates. When interest rates go up, bond prices generally drop and vice versa. Tax exempt investing offers current tax exempt income, but it also involves special risks. Interest income from certain tax exempt bonds may be subject to certain state and local taxes and, if applicable, the alternative minimum tax (AMT). Common trust funds are commingled funds of accounts for which U.S. Trust acts as executor, administrator, guardian, trustee, and donee of power to manage money during infancy, custodian of certain gifts to minors or conservator and certain other fiduciary relationships. All investors are not eligible to invest in common trust funds. Clients who do not have other relationships with U.S. Trust will not be permitted to invest in a common trust fund. International investing involves special risks, including foreign taxation, currency risks, risks associated with possible differences in financial standards and other risks associated with future political and economic developments. Investing in emerging markets may involve greater risks than investing in more developed countries. In addition, concentration of investments in a single region may result in greater volatility. Investment products: Are Not FDIC Insured Are Not Bank Guaranteed May Lose Value U.S. Trust operates through Bank of America, N.A., and other subsidiaries of Bank of America Corporation. Bank of America, N.A. and U.S. Trust Company of Delaware (collectively the Bank ) do not serve in a fiduciary capacity with respect to all products or services. Fiduciary standards or fiduciary duties do not apply, for example, when the Bank is offering or providing credit solutions, banking, custody or brokerage products/services or referrals to other affiliates of the Bank. Bank of America, N.A., Member FDIC Bank of America Corporation. All rights reserved. ARAL5UAC 10/2013 4

5 5