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Investment Philosophy
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investment philosophy
investment_philosophy

What Is Our Investment Philosophy?


Here at PFI Strategies, our investment philosophy for managing a fixed-income portfolio is to strike the right balance of managing risk while seeking opportunities to maximize return in the marketplace.


We feel strongly that each public entity we work with should have a written investment strategy that’s separate and distinct from its investment policy. How do they differ? The strategy is how we “play the game,” so to speak, while the policy spells out the rules of the game. For example, the policy would stay the same whether interest rates are high or low, but the strategy would dictate how the portfolio should be rebalanced to protect against the inherent risks of market fluctuation.


arrMandates: Liquidity, Safety and Yield
Central to our investment philosophy is risk management, because in every investment there is risk. We identify the risk, hedge the risk, and counter balance the risk; then we educate our clients on the risk in the portfolio and specify how we will manage those risks. We use macroeconomic, technical and yield curve analyses to get a bearing on market interest rates and adjust the investment maturities. Additionally, we keep a watchful eye on the yield differentials between classes of bonds (e.g., high-grade corporate and government) in an attempt to take advantage of an anticipated widening of spreads. In a higher interest rate market we recommend increasing duration and a “barbell” (half short term and half long term) for flexibility and potential for capital gains in investments.


arrHow We Manage Risk
Risk management is central to our investment philosophy, because there’s risk in every investment. We identify, hedge and counterbalance the risk and then educate our clients about the risks in their portfolio and specify how we will manage these risks. Using macroeconomic, technical and yield curve analysis allows us to get a bearing on market interest rates and adjust investment maturities accordingly.

Additionally, we keep a watchful eye on the yield differentials between classes of bonds (e.g., high-grade corporate and government bonds) in an attempt to take advantage of an anticipated widening of spreads. In a higher interest rate market, we recommend increasing duration and a “barbell” (half short-term and half long-term) for maximum flexibility and potential for capital gains.