Fiera Capital Tax Efficient Short Intermediate SMA

Idea Generation

Investment Committee utilizes both macro indicators and municipal market data to drive active management positioning. Strategies are set within the context of the investment outlook adopted by the committee. Fiera Capital’s fixed income team adjusts several variables within a given strategy, relative to their strategic norms, to reflect a regularly updated active investment outlook. Active decisions concerning yield curve positioning, quality exposure, sector allocation, security selection, and crossover opportunities are at the core of the investment process. 

Credit Research

The investment team’s objective in credit evaluation is to help meet clients’ investment goals of preservation of capital and maximizing total return by seeking credits and special situations that will improve over time and by avoiding weak or deteriorating credits. The fundamental credit research process is designed to scrutinize the underlying risk associated with all positions within the portfolio. 

• Through detailed research and analyses, the team compares similar obligors’ risk measures including an analysis of the legal structure of the bonds. This review focuses on the security provisions offered to the bondholders. If needed, the team will also utilize issuer engagement to solicit further information.
• This analysis culminates in the approval or rejection of the credit of the underlying issuer before purchase. These assessments are further updated on an ongoing basis for surveillance purposes.

Portfolio Construction

Strategy Guidelines are based on individual tax situation and risk tolerances, including interest rate and credit risk tolerance.

• Portfolios will consist exclusively of investment grade securities, including Municipals, Treasuries, corporates, and agencies.
• New credits approved prior to purchase for both primary and secondary issues, including ongoing monitoring of credits.
• Within strategy guidelines, active management variables are set relative to the benchmark.
• Allocations filled by the portfolio management team through primary and secondary markets.
• Regular review of portfolios for compliance with investment guidelines and Fiera Capital investment parameters.

Risk Management

Portfolios seek to provide a stable anchor to an overall investment allocation, integrating risk management systems and procedures along each step of the investment process.

• Interest Rate and Liquidity Risk:
  • Target to purchase high quality, large liquid positions by primarily focusing on issuers with over $50 million outstanding 
    
  • Seek to limit negatively convex bonds to avoid duration extension by limiting exposure to callable bonds and buying high coupons

• Credit Risk:
  
  • New credits approved prior to purchase for both primary and secondary issues 
  • Ongoing credit surveillance including technology enabled local headline monitoring

• Sell Discipline:
  
  • Credit deterioration
  • Tax Loss Harvesting
  • Changes to yield curve, sector, or crossover outlook