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| Miguel Biamon |
Bryn Mawr Trust Wealth Management will put new money to work in single-A corporate and callable agencies in the seven- to 10-year range, said Miguel Biamon, v.p. and director. He manages around $450 million in taxable fixed income. Bryn Mawr is a high-quality investor that buys single-A bonds and better in the one- to 10-year range. Biamon explained he will put money to work in the long end as he expects the 2-to-5 year area of the curve will underperform in a yield curve flattening environment. Biamon's portfolio is overweight its benchmark, the Lehman Brothers Intermediate Government/Credit Index, in agencies and corporates. He is underweight in Treasuries. "Even if the bond market stays flat, agencies and corporates will outperform Treasuries," he noted. Bryn Mawr's portfolio is comprised of 60% in corporates, 35% to agencies and 5% in Treasuries.
In the corporate sector, Biamon likes financials. "A single-A rated financial will pick up 25 basis points over an A-rated industrial in the 5-year range and 50bps in the 10-year range," he said. Biamon noted this is due to technical issues caused by financial issuers coming to market more frequently than companies in other sectors. He highlighted bonds from brokers such as Merrill Lynch and Lehman in the five-year range as especially attractive.
Bryn Mawr also finds callable agencies worthwhile. "Five-year non-call agencies are only 25bps over Treasures. Optionality adds as much as 50bps over a five-year," Biamon explained. A three-month call range can give you as much as 75bps over, he said. Biamon noted step-up agency bonds are also attractive in a rising-rate environment and have performed well.
