Fixed Income Investment Philosophy and Process

For more than 25 years, the senior members of Baird Advisors have applied a structured, risk-controlled approach to fixed income management. Supported by strong fundamental research, the team combines the science of understanding, measuring and controlling portfolio risks with the art of adding incremental, relative value to portfolio returns.

Baird Advisors' investment philosophy is based on the following key principles:

The bond market is very efficient in discounting risk and return over the long term, and market benchmarks accurately reflect this across the duration curve.
It is extremely difficult to consistently forecast interest rate changes correctly.

Baird Advisors believes a duration-neutral approach offers the most effective way to control portfolio risk and focus on adding value over and above benchmark returns through yield-curve positioning, sector allocation, security selection and competitive trade execution.

The team purchases only U.S. dollar-denominated securities and manages portfolios with two important objectives:

Achieve return of benchmark for each client portfolio
Achieve consistent incremental returns over the benchmark

By nature, benchmarks are very competitive. Consistent outperformance of benchmark returns produces very competitive performance over-time. Baird Advisors has earned a reputation as a leading investment-grade fixed income manager by controlling risk and consistently beating benchmarks.

With a clear understanding of each client’s unique investment goals and objectives, the team strives to outperform by adding incremental returns above and beyond the benchmark over complete market cycles. This is done primarily in several ways:

Duration Neutrality
A portfolio's duration is a precise measure of its interest-rate sensitivity. Remaining duration-neutral at all times helps control this key element of risk in a bond portfolio.

Yield Curve Positioning
The team analyzes the entire yield curve on a continual basis, emphasizing points on the curve with the greatest return potential. Because the yield curve changes constantly, optimizing a portfolio's position on the curve is a dynamic process.

Sector Allocation
Baird Advisors continually evaluates long-term return potential for each sector, concentrating on general and specific risks. Within a portfolio's guidelines, the team emphasizes sectors with the greatest risk-adjusted return potential.

Security Selection
Issues are selected based on the best relative value within each sector and according to individual portfolio goals. Yield curve and sector preferences come together with credit evaluations when specific securities are purchased.

Competitive Execution
Continual market evaluation and long-standing relationships with many of the leading broker-dealer firms on Wall Street, as well as electronic trading platforms, enable consistent, competitive execution of trades.

Our objective is to provide our clients with predictable, consistent and competitive investment results over complete market cycles.

For more information about Baird Advisors’ investment philosophy or process, contact .

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This site has been published in the United States for residents of the United States. The foregoing has been prepared solely for informational purposes and is not an offer to buy or sell or a solicitation of an offer to buy or sell any security or instrument or to participate in any particular trading strategy. Securities, products and services are offered through Robert W. Baird & Co. Incorporated. Member FINRA and SIPC.