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Pennsylvania Manager Looks To Finance Paper, Diversifies Agencies

Miguel Biamon, v.p. and director of fixed income at Bryn Mawr Trust Co., a Pennsylvania firm with about $2.3 billion in assets under management, is looking to diversify his agencies and increase his allocation to corporates by buying financial names.

Miguel Biamon, v.p. and director of fixed income at Bryn Mawr Trust Co., a Pennsylvania firm with about $2.3 billion in assets under management, is looking to diversify his agencies and increase his allocation to corporates by buying financial names. Biamon has kept his allocation to corporates overweight by buying issuance from Morgan Stanley, Merrill Lynch and Goldman Sachs, as well as other firms. "They just offer us the most attractive yields. It's very possible to be 70-75 basis points over on the five-year and 90-95 over on the 10-year," Biamon said about the benefits of buying financial sector paper.

Biamon has also been trying to add some diversity to his agency allocation. "I've been looking into agencies that have various call times, quarterly, semi-annually, continuous, one-time calls, a lot of variety. I've also been looking into bonds with more [options]; I have a better chance to be paid more for the risk that I take on," he noted. Recently, he has been looking at mortgage-backed securities. He thinks they are worthwhile credits to hold on to because in a higher rate environment they will outperform expectations and many other credits in his portfolio. He describes it as a "low risk, high reward proposition," despite the fact there is no allocation for MBS in his benchmark.

The manager recently bought into step-up coupon bonds as well. "Our strategy for a long time has been to overweight our portfolio and so far it has paid off very nicely," he said. Biamon noted that as of Feb. 21, year-to-date, his portfolio is up 21 basis points versus his benchmark. "When you project that over a full year, that's around 1% out-performance against the benchmark," Biamon explained. Last year, he beat his benchmark by about 70 basis points. His current allocation is 5% in Treasuries, 45% in corporates and 50% in agencies.

Biamon's benchmark is the Lehman Brothers Intermediate Government Credit. His duration is currently about three and three quarters of a year.

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