Reinhart, Mahoney & Bryden, a Mequon, Wis.-based firm with $700 million in taxable fixed-income under management, is seeking to shift up to 5%, or $35 million, to its corporate allocation. Jeff Bryden, portfolio manager, says he is waiting to be sure the economy has bottomed, and will read the text of last week's Federal Reserve press release closely, but did not specify a definitive time-frame for making the move. He declined to name specific credits or sectors he is interested in. He wants intermediate maturities to raise the duration on his intermediate portfolios closer to the fund's bogey, though he says much will depend upon the shape of the yield curve when he invests.
Among financials, Bryden likes regional banks, which he says have gotten better at asset liability management, and are not as sensitive as they used to be to shifts in interest rates. Banc of America is a name he has bought in the past and still holds. He may continue to seek to add to this name for clients who are not already loaded up in the paper. Industrials in the fund include Honeywell and Ford Motor Credit. He would likely use a combination of new cash flows and Treasuries to finance the new purchases, focusing primarily on intermediate maturity secondary issues.
Bryden says the firm might also consider adding 2%, or $14 million, to asset-backed securities. In the asset-backed arena, the firm favors credit-card and auto deals because he believes they offer the best combination of yield and high credit quality, as well as liquidity.
The firm's portfolio has an average duration of 3.5-years, slightly shorter than its most common benchmark, the 3.6-year Lehman Brothers intermediate index. It allocates 55% to corporates, 18% to mortgage-backed paper, 15% to Treasuries and 12% to ABS.