Products: Core Fixed Income

Small Cap Growth Equity   •   Large Cap Growth Equity   •   Core Fixed Income   •  Intermediate Fixed Income   •   Short-term Fixed Income  •   Balanced

Investment Managers:

Andrew M. Cantor, CFA
Principal, Director of Fixed Income Investments
33 Years of Investment Experience

David A. Furfine, CFA
Partner, Fixed Income Portfolio Manager
24 Years of Investment Experience

Phone: (904) 493-5500
Fax: (904) 493-5524

Philosophy
Sawgrass Asset Management's active Core Fixed Income product has incorporated a defined investment philosophy whose effectiveness has been proven since its inception in 1998. This strategy focuses primarily on controlled duration management of investment grade securities and secondarily on strategic sector valuations and specific security analysis. This portfolio has an effective duration that ranges from 4-6 years and an average maturity that ranges from 8-12 years. There currently are no sector constraints. The investable universe consists of U.S. dollar-denominated government, corporate and mortgage-backed securities. The investment approach is managed to the Lehman Aggregate Index.

Process
We begin by identifying a universe of securities consistent with our client's objectives and policies. For corporate issues, we further screen based on measures of credit worthiness.

Our next step focuses on the maturity structure decision. We base this decision on our interest rate forecast, the resulting yield curve configuration, and our confidence in these two predictions.

In forecasting the direction of interest rates, we evaluate five distinct factors: economic growth rates, fiscal policy, monetary policy, inflation and international events. With this interest rate forecast, we then analyze the current yield curve configuration, which tells us which maturities, relative to the benchmark, are most likely to provide additional returns.

We will then structure the portfolio's effective duration within a range of +/-20% from the appropriate benchmark.

Sawgrass also seeks to add value for clients through our evaluation of the relative attractiveness of market sectors. We evaluate sectors according to the stage of the economic cycle, yield relationships and performance simulations.

Having established a maturity, sector, and quality framework, we analyze the structure of specific fixed income securities. The process considers such items as redemption features and uses rich/cheap analysis to find undervalued issues. Before the final selection of a security, we run a performance scenario analysis to better understand how the specific issue will perform given various changes in the market.

Our sell discipline considers market conditions, portfolio re-balancing and specific issue fundamentals. When a portfolio change in duration or sector allocation is implemented, sell candidates are evaluated so as to accomplish the portfolio adjustment as efficiently as possible.

Why Fixed Income?
The Fixed Income Market in the United States is comprised of debt securities issued by the U.S. Government and Federal Agencies, Corporations and political subdivisions. Interest rates are typically, but not always, fixed for a defined period of time and principal is typically due at maturity. A significant and growing segment of the fixed income market is made up of mortgage and other asset backed securities, which typically pay principal back over the life of the security. Corporate debt securities may be subdivided by creditworthiness (investment grade/non-investment grade) and often have prepayment provisions such as calls, puts or sinking fund features. The total return of fixed income securities is largely (but not exclusively) a function of interest rates as bond values tend to rise in falling rate environments and fall in rising rate environments. The sensitivity of fixed income securities to changes in interest rates is measured by a security's duration, which, in turn is related to its maturity. Generally speaking, fixed income securities, as an asset class, have provided lower returns, on average than have common stocks but typically experience less volatility and can produce more certainty of return for a given time period.