Management of the institutional products is founded on the belief that active sector rotation, combined with disciplined risk management and careful security selection, may result in optimal performance for our clients in the fixed income markets.
Goodwin Capital Adviser’s investment process relies upon intensive fundamental analysis and disciplined risk management. There are three steps in our portfolio management approach: 1) Sector analysis and allocation; 2) Fundamental research and issue selection; and 3) Portfolio construction; portfolio oversight and risk management.
Our sector allocation process begins with the analysis of each of the sectors in our investment universe. We seek to establish relative valuations among the sectors in order to identify where the greatest opportunities lie. Based on our assessment of relative value, we establish target portfolio allocation percentages for each sector, emphasizing those sectors we believe are most undervalued.
Issue selection combines a focus on valuations with fundamental analysis, to identify undervalued securities. Fundamental research is an ongoing process in which our research team is always engaged. Goodwin has deep credit research resources commensurate with the scope of our investment universe. The internal credit research process is proactive and seeks both to identify the current fundamentals of a particular issuer and to predict future developments in credit rating for specific issues.
Portfolio construction is a combination of top-down sector allocation and bottom-up issue selection, both of which are based on relative valuation. Portfolios are designed to be neutral in terms of duration relative to the benchmark, to minimize our exposure to interest rates. The portfolio construction process begins with the analyst and/or the trader bringing new information to the portfolio manager, who performs the final assessment of relative valuation and, where appropriate, makes the decision regarding optimum position size and suitable portfolios for placement. Regular monitoring and review are critical to the integrity of the risk management process. At Goodwin, we have multiple levels of monitoring and review involving every level of our research and management staff.