White Papers

Since the Reserve Primary Fund “broke the buck” in September 2008, the SEC has been eager to adopt new rules governing money market funds.  After much debate, the new reform rules were finally released in July.  In this white paper we take a moment to address a few key questions.  What are the major components of the money market reform?  How will these changes affect institutional clients...

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As the SRI and ESG landscape continues to develop, we take a look at the history of responsible investing and the direction it has taken in recent decades.  We also explore the application of SRI and ESG principles to fixed income investing.  This covers not only the credit sector, but the options for application across all sectors.  

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Cheap sectors and individual securities exist in the fixed income market because of non-economic factors, such as investor preferences, supply/demand imbalances and size constraints.  These structural factors create pockets of inefficiencies, which can be exploited by smaller, more nimble investment managers.  The following paper provides a sampling of several strategies and processes Longfellow Investment Management Co. (LIM) follows to capitalize on these opportunities and add value for our clients.

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Tax rates are an important consideration in fixed income asset allocations. Tax exempt investors can benefit from “crossing-over” into tax-free municipals when municipal bond yields rise to abnormally high levels relative to taxable bonds. Conversely, taxable investors can benefit from the crossover trade in reverse, i.e. buying taxable securities when municipal bond yields are unusually low relative to taxable bonds.

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At Longfellow, it is our belief that U.S. government backed markets are largely efficient. Supply and demand characteristics skew individual TIPS bonds and cause dislocations in the pricing of the TIPS curve. We attempt to take advantage of these dislocations by investing in specific TIPS maturities when they are cheap relative to the curve and selling specific maturities when they are rich.

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Many investors are grappling with the impact that rising interest rates could have on their portfolio. Given the questions we receive on this topic, and the risks to certain fixed income securities, we have outlined some of the key areas to monitor and opportunities to consider.

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