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Boston Buyer Eyes Corporate Overweight

Merganser Capital Management plans to add corporates in the coming months to its $300 million core fixed-income portfolio.

Bob LeLacheur

Merganser Capital Management plans to add corporates in the coming months to its $300 million core fixed-income portfolio. Bob LeLacheur, portfolio manager in Boston, said he will add corporates when the 10-year yield hits 5%. The 10-year Treasury yield was at 4.35%, the lowest since mid-April, on July 19. He declined to quantify any potential move. LeLacheur said he will add assets in the financial sector but declined to name specific credits. The portfolio's benchmark is the Lehman Brothers Aggregate Bond Index.

Forty percent of the portfolio is in corporates, where it is 15% overweight relative to the benchmark. LeLacheur noted this is well below the firm's maximum allocation for this sector, which is 60%. The portfolio is overweight in high-coupon, amortizing securities and securities that produce a lot of cash flow, LeLacheur said.

The portfolio is 13% underweight in mortgages, 15% underweight in Treasuries and 13% overweight in asset-backed securities. The portfolio is slightly short duration.

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