Total return fixed income

Philosophy I Process I Products

Advantus manages a variety of fixed income strategies designed to optimize total return. Our process emphasizes measuring and managing risk and return of individual securities relative to the benchmark. The foundation of our bottom-up, fundamental process is high-quality, proprietary research generated by our internal research team.

Philosophy I Process I Products

Total return fixed income investment philosophy

• The fixed income market is frequently inefficient; a bottom-up, fundamental research approach that identifies mispriced securities consistently produces superior results

• Investment professionals with expertise in both security selection and sector relative value analysis are best equipped to identify mis-priced securities

• Interest rate anticipation is not highly compensated and is de-emphasized in our process

• Active risk management is critical at the security level, and when combined with risk controls in portfolio construction, enhances risk-reward tradeoffs and management of tracking error

Philosophy I Process I Products

Total return fixed income investment process

Security selection (55-70%)

• Focus on relative value, marrying opportunity and risk
• Use Initial Security Filter tool and proprietary research systems
• Manage position relative to benchmark security weightings

Sector allocation (15-25%)

• Sector weightings accentuate security selection and differ from benchmark
• Initial relative valuation based on historic spread relationships

Portfolio risk adjustments (5-15%)

• Tactical credit and convexity mismatch

Interest rate positioning (0-10%)

• Avoid short-term interest rate trading
• Restrict duration deviation exposure

Philosophy I Process I Products

Total return fixed income products

Mortgage Securities
This is a fixed income strategy managed against the Barclays Capital U.S. Mortgage-Backed Securities Index. The strategy invests in residential and commercial mortgage-backed securities, as well as asset-backed securities. The duration for the strategy is typically within 10 percent of the benchmark.

Full Duration
This is a core fixed income strategy managed against the Barclays Capital U.S. Aggregate Bond Index. The Full Duration strategy invests predominantly in investment grade securities, focusing on corporate bond and structured finance issues. The duration for the strategy is typically within 10 percent of the benchmark.

Intermediate Duration
This is a fixed income strategy managed against the Barclays Capital Intermediate U.S. Government/Credit Index. In addition to government and corporate securities, the Intermediate Duration strategy invests in structured finance securities, which are not included in the benchmark. The duration for the strategy is typically within 10 percent of the benchmark.

Short Duration
This strategy is managed against the Barclays Capital Short Treasury 9-12 Month Index. The Short Duration strategy invests predominantly in investment grade securities, focusing on corporate bond and structured finance issues. The duration for the strategy is typically within 20 percent of one year.

Long Duration
This is a fixed income strategy managed against the Barclays Capital U.S. Long Government/Credit Index. In addition to government and corporate securities, the Long Duration strategy invests in structured finance securities, which are not included in the benchmark. The duration for the strategy is typically within 10 percent of the benchmark. 

Core Plus
This fixed income strategy is managed against the Barclays Capital Aggregate Bond Index. The Core Plus strategy focuses on corporate bond and structured finance issues. The portfolio can invest up to 20 percent in below investment grade securities. The duration for the strategy is typically within 10 percent of the benchmark.