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Jennison has been managing fixed income portfolios for stable value clients since 1991. We believe that our investment approach can be suited to stable value clients. Since our firm’s fixed income investment strategy is based on adding value in the high quality sectors without employing interest rate anticipation, our portfolios tend to track their benchmarks closely. We do not have to change our investment approach to manage stable value accounts, and our results are typically characterized by low relative volatility with an objective of providing better yield/return than the benchmark.
We have managed stable value portfolios against many different benchmarks over the years.
- Bloomberg Barclays US Aggregate Bond Index
- Bloomberg Barclays US Intermediate Aggregate Bond Index
- Bloomberg Barclays US Intermediate Gov/Credit Bond Index
- Bloomberg Barclays US Intermediate Gov/Credit A+ Bond Index
- Bloomberg Barclays US Intermediate Government Bond Index
- Bloomberg Barclays US Gov/Credit 1-5 Year Bond Index
- Bloomberg Barclays US Gov/Credit 1-5 Year A+ Bond Index
- BofA Merrill Lynch 15+ Year US Treasury Index (G8O2)
- BofA Merrill Lynch 5-10 Year US Treasury Index (G6O2)
- BofA Merrill Lynch 1-10 Year US Treasury Index (G5O2)
- BofA Merrill Lynch 1-3 Year US Treasury Index (G1O2)
- BofA Merrill Lynch US Treasury Index (G0Q0)
- Custom Benchmarks
The objective of our Intermediate strategies is to provide desired alpha without taking fundamental risk. We only use investment grade securities and our portfolios generally have a higher quality profile than their benchmarks. Individual security selection drives our corporate, asset backed, agency, commercial mortgage-backed securities (CMBS) and collateralized mortgage obligation (CMO) sector management. We actively trade within each of these sectors. We manage pass-throughs based both on individual security analysis as well as the richness or cheapness of the sector as a whole. Portfolio durations are kept very close to benchmark durations. At extremes in yield curve shape, we will make moderate yield curve bets.
Our decision-making is based on the belief that investment values revert to the mean over time. This belief applies to yield spread and yield curve shapes. Because we use higher quality securities, we have confidence that such reversion will take place.
Eight portfolio managers are responsible for managing stable value fixed income accounts. We designate a lead portfolio manager and a back-up for each account. The lead manager is responsible for coordinating and implementing the team’s decisions for the individual accounts. The lead is also the key contact person for the client.