Core Taxable Fixed Income Market

Appleton's Taxable investment strategy seeks to provide growth of capital along with income generation for individuals, foundations, endowments and defined benefit plans, among others. The investment discipline has two main criteria: consistent returns and a conservative risk profile. Portfolios are invested primarily in bonds with intermediate maturities. Durations generally range from 3.0 to 5.0 years, with maturities ranging from 2 - 12 years. Portfolio turnover averages 25% annually. Appleton's active expertise in growing principal as well as income looks to capture value across the curve, capitalize on market inefficiencies, and reduce the interest rate sensitivity of each portfolio. As an active manager, Appleton weighs portfolio holdings versus new opportunities in the marketplace. All trading is carefully evaluated to determine its impact on performance and overall returns. Appleton seeks to invest client cash within 30 to 60 days or restructure existing portfolios to adhere to guidelines. Appleton dissects the yield curve, focusing on the intermediate area, to target appropriate interest rate risk exposure. We believe that clients can exceed benchmark returns with lower interest rate risk and higher credit quality, as credit risk is not always appropriately priced into the markets. Our model portfolio is a “government/credit” portfolio for diversification reasons, with 30% to 50% of the portfolio invested in Treasury and Agency issues and 50% to 70% invested in investment grade corporate issues. Appleton portfolios reflect an average A rating or better. Appleton's active approach to management captures value across the curve, capitalizes on market inefficiencies, and adjusts interest rate sensitivity to respond to a given rate cycle.

Portfolio Objective:

Preservation and growth of capital with disciplined management of liquidity risk, interest rate risk, and credit risk.

Sample Investment Guidelines

  • AVERAGE MATURITY: The portfolio will be constructed to maintain an average effective maturity not to exceed 6 years
  • FINAL MATURITY: No single security will have an effective maturity in excess of 12 years
  • LIQUIDITY: The portfolio will maintain liquidity sufficient to meet income needs of the client
  • U.S. CURRENCY: All investments will be held in U.S. dollars
  • ELIGIBLE INVESTMENTS: Will be limited to:
    1. Obligations issued by the U.S. Treasury
    2. Obligations issued by U.S. Federal Agencies
    3. Investment Grade Corporate Obligations
    4. U.S. Federal Agency Mortgage Backed Securities
    5. AAA Asset Backed Securities
  • CREDIT QUALITY: All holdings will be Investment Grade credit quality with an average rating of A or better
  • MARKETABILITY: Holdings should be sufficient size and held in issues which are traded actively to facilitate transactions and provide portfolio liquidity
  • TRADING: All purchases and sales will be executed at the best net price to the client.
  • DIVERSIFICATION: Adequate diversification required to appropriately spread credit risk among various issuers. No issuer with the exception of money market funds, repurchase agreements, U.S. Treasury, or U.S. Agency issues should constitute more than 5% of the portfolio's assets at time of purchase
  • TAX STATUS: To be determined by client's accounting professional
  • BENCHMARK: Lehman Brothers Gov't/Credit Intermediate Index
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