Financial Counselors plans on shortening the duration on its agency allocation, and will probably increase exposure to investment-grade financial sector corporate debt. Portfolio manager Peter Greig, who runs some $1.2 billion in taxable fixed income, is waiting for a retest of $106 on 30-year T-bond futures before selling 10-year treasuries to shorten the overall duration of his portfolio. He plans on making the move because he feels the short end of the curve is overpriced.
Greig is less certain he will increase his exposure in corporates, where he is currently maintaining an underweight at 36% of his portfolio. Financial credits, particularly banks, are the only corporate bond sector that he likes at the moment; he declined to be more specific.
The Kansas City, Mo., fund has an asset allocation of 40% in U.S. Treasuries, 36% investment grade (A or better) in corporate bonds, 17% in callable agencies, and 7% in MBS (CMOs). The fund's duration is 5.53 years, and is just under theLehman Brothers government/credit index at 5.58 years.
