Our approach to fixed income investing focuses on maximizing interest income while minimizing risk to principal.

• We build our tax-exempt fixed income portfolios around a core of AA to AAA-rated higher coupon premium municipal bonds with longer stated maturities that are priced to a shorter call date. Bonds with these charateristics have less interest rate sensitivity than par bonds or discount bonds. These "cushion" bonds provide stability in periods of rising rates. This bond stucture is a niche segment of the municipal market that is inefficient and often provides yields that are superior to par bonds.
  
  
• We build our taxable fixed income portfolios around a core of AAA-rated higher coupon premium GNMA mortgage pass-through bonds. Premium GNMA's have less interest rate sensitivity than par bonds or discount bonds. Pre-payment risk for the GNMA portion of the portfolio is mitigated by investments in taxable municipal bonds and preferred stocks with a "cushion" structure. We will also invest in Agency (GSE) and high-grade corporate bonds with varying structures when they are attractive relative to Treasuries.
  
  
• Our experience has shown that this portfolio structure outperforms in periods of stable or rising interest rates. We believe this conservative approach combines above-average returns with low risk exposure over time.