Fixed Income Investing

Our customized fixed income portfolios are designed to provide our clients with stable income, preservation of capital, and predictable returns while maximizing after-tax cash flows within established risk parameters.

Covington seeks to add value through sector rotation, duration management, and tax-efficient investing.

Our core fixed income style focuses on short to intermediate maturities of investment grade issuers with diversification across maturities, industries, and geographies.   

Covington customizes portfolios by selection from the following types of bonds:

  • U.S. Government and Agency bonds
  • Sovereign Bonds
  • Corporate Bonds
  • Municipal bonds
  • Mortgage-backed securities

We employ active management with particular emphasis on the following:

  • Slope and shape of yield curve
  • Spreads
  • Call structure
  • Liquidity
  • Credit risk

We do not try to predict interest rates, but will adjust the duration of a portfolio as interest rates rise and fall.  We are actively focused on finding relative value opportunities within various subsectors of the market and will adjust sector emphasis accordingly. 

Our research process when evaluating municipal bonds includes a comprehensive analysis of the underlying issuer.  We carefully review the specific bond covenants and analyze the source and terms of the repayment of debt.  We actively monitor national opportunities as well as state-specific opportunities.   

When reviewing potential corporate bond allocations, our primary focus is the economic stability of the industry as well as the financial strength of a particular credit.  Our fixed income portfolio managers utilize both in-house and external research sources.  As analysts, we pay particular attention to quantitative and qualitative measures of a company to evaluate credit risk.  When a credit is deemed a potential investment, the yield and spread are evaluated to determine inclusion in portfolios.  

Our strong relationships with institutional trading desks around the country provide us with broad product access and attractive pricing both in the new issue and secondary markets.  These extensive trading networks are designed to provide best execution when both buying and selling fixed income securities.