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| Gary Wolfer |
Univest Management and Trust is putting some new cash to work in the agency market. Gary Wolfer, senior portfolio manager, said he decided to invest in callable agency debentures on the view that rates will rise and call risk is not a concern. "I'm much more comfortable buying now thanks to the dynamics of the economy and the rates. As long as I can get at least one to two years of call protection I see it as a good investment," Wolfer noted. Wolfer sees yields as attractive, but did not specify the additional yield he is capturing. The Soudertown, Pa., manager has $700 million in fixed income under management. His portfolio allocation is comprised of 25% tax-free state muni paper, 20% in corporates, around 55% in agencies and 5% in commercial paper and short- term instruments.
Univest is also buying shorter dated paper. "I'm testing the waters as far as shorter maturities in fixed income are concerned," said Wolfer. The reasoning lies with Wolfer's assessment the Federal Reserve will raise rates three more times this year, once in August, once in September and once in November bringing rates to 4% by year-end. As a result, yields at the long end of the curve would rise so Wolfer sees it as prudent to deploy cash balances to short term agency securities,
Wolfer has begun to re-invest in corporates, as it seems the negative psychology associated with Ford Motor Company and General Motors credit quality has dissipated. Wolfer is focusing on health care and industrial sectors, which he considers defensive sectors, for his investments. Wolfer feels that financials will have problems. He declined to quantify how much he intends to add in credit. Wolfer does not use a benchmark, but monitors Merrill Lynch's One to Three Year Index. His duration is currently 3 1/2 years.
