We invest in fixed income securities primarily to reduce volatility and to add income. Because of the historically low correlation between fixed income and equity returns, income securities will add a degree of stability to a portfolio. We focus on investment grade corporate debt, preferred securities, U.S. agencies, U.S. treasuries, and municipal bonds when appropriate.
We apply a top-down investment approach when looking at fixed income securities. Selway undertakes a disciplined examination of macroeconomic policy and economic statistics in order to determine our interest rate and yield curve expectations. We examine the relative value across security types and industry sectors. We then use our expectations to make security, duration and sector decisions. Lastly, we focus on individual issues by examining liquidity, credit quality, yields, and yield-spreads. Investments are diversified across multiple sectors to reduce risk of business cyclicality.