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Arizona Manager Uses a High-Yield, High-Quality Strategy

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Brent McQuiston said his firm, WealthTrust-Arizona, applies a high-yield, high-quality strategy to its portfolio.

Brent McQuiston

Brent McQuiston said his firm, WealthTrust-Arizona, applies a high-yield, high-quality strategy to its portfolio. In the high-quality area, the firm looks to pick individual high-grade bonds typically rated A or better. On the high-yield side, it is looking at credits that go out no more than three to five years. "We are looking at the yield curve and seeing where the sweet spot on the yield curve is and we don't see anything out past three to five years that is extremely attractive, [though there are] a couple of exceptions," he said. The firm does not often buy individual corporate names, rather it leans toward individual mutual fund selections, such as PIMCO High Yield. The firm also looks at equity structured notes, which can pay a really high rate of return, but can also be very risky. "It is kind of a complex product," he explained. "It is something that we use to work well as part of our high-yield strategy. It is kind of a hybrid between stocks and bonds."

He anticipates it will continue to buy into equity structured notes as well as having exposure to the high-yield bond market through the PIMCO fund and smaller allocation in Dodge & Cox funds in 2007. It will also buy individual names, such as Fannie Mae, and it will look at high-yield municipals. "Really, right now, the key with this environment is timing and getting the right price," he said.

With offices in both Scottsdale and Chandler, Arizona, WealthTrust-Arizona has $600 million in assets under management. It is an affiliate of WealthTrust, a Nashville-based manager with about $6.5 billion in assets under management.

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