DM Fixed Income Process
Dixon Mitchell actively utilizes three levers in the management of fixed income assets: duration adjustment, credit analysis, and liquidity opportunism.
Duration Adjustment – fixed income portfolio duration is modified to reflect economic conditions and yield curve characteristics. Adjusting duration allows DM to both manage portfolio risk and enhance total return.
Credit Analysis – by leveraging our analytical work in the equity space, we are able to uncover credits offering higher yields than their risk profiles would imply. DM’s active allocation management between government and corporate bonds also adds significant value to our clients’ fixed income portfolios.
Liquidity Opportunism – DM’s moderate size allows us to participate in smaller, less liquid bond issues which are inaccessible to larger asset managers. This area of the bond market represents an important source of excess return and has contributed to the strong performance in the fixed income components of DM mandates.
- Typical portfolio structure:
50% Government / 50% Corporate [max. 60% corp.]
- Allocation between Govt of Canada and Provincial bonds
based on spread [Max 20% in real return bonds]
- Duration maintained at +/- 6 months from Index
Shorter Corporates + longer governments
- Buy and hold to maturity unless opportunity
to enhance portfolio presents itself