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Bryn Mawr Moves Down Credit Curve

Bryn Mawr Trust Wealth Management is inching down the credit ladder in search for more yield within investment-grade corporates and plans to swap about 5% from its double-A allocation into single-A bonds.

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Bryn Mawr Trust Wealth Management is inching down the credit ladder in search for more yield within investment-grade corporates and plans to swap about 5% from its double-A allocation into single-A bonds. Miguel Biamon, v.p. and director of more than $600 million in fixed-income investments, says double-A and triple-A bonds are not providing the returns he is looking for. While the firm still maintains high-quality positions, Biamon says he has begun investing more in single-A credits for Bryn Mawr's accounts benchmarked against the Lehman Brothers Intermediate Government/Credit Index, which account for roughly $100 million. He declined to name specific credits he may buy as part of the move, except to say he prefers utilities and financials and doesn't see much value in the industrial sector where spreads are tight.

Biamon expects lower-quality credit will continue to outperform, with spreads tightening through the year because of political and economic factors such as the Federal Reserve leaving rates unchanged and the upcoming elections. Other than moving down the credit ladder however, he is not looking to change his current allocations of 65% to corporates (an overweight position), 20% to agencies (neutral) and 15% to Treasuries (underweight). The fund currently invests 35% of total assets in single-A, 25% in double-A and 5% in triple-A bonds. Biamon has already shifted about 20-25% to single-A securities from higher-quality credits. He doesn't see much more spread tightening in high-quality investment grade corporates and expects carry to be a more significant component of returns for the year. He does not make duration bets and is even to the benchmark's 3.75 years.

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