Inflation-Indexed Fixed Income

Pure-play, active strategy for strategic inflation protection

Strategy Objectives

Our portfolios aim to provide inflation protection and deliver returns in excess of passive alternatives. We have built a diversified set of pure-play, actively-managed strategies seeking to capture extra return in the TIPS market. Our strategies identify and exploit repeatable patterns and other forms of market inefficiencies.

Investment Principles

  • Pure-play active management
  • Research-informed decisions
  • Long-term perspective
  • Discipline and patience

Our results since the inception of the market in 1997 support our belief in a pure-play, active management approach to TIPS.



Jim Evans SVP and Portfolio Manager

Investment Process

We use the following set of diversified set of pure-play, actively-managed strategies to seek excess returns.

 

Fundamental Strategies

  • Real Yield Duration
  • Real Yield Slope vs. Nominal Yield Slope

Non – Directional Strategies

  • Roll-Down
  • Auction Cycle Trading
  • Seasonal Pattern
  • Deflation Floor
  • Index Pattern

Opportunistic Strategies

  • Nominal Bonds – Breakeven
  • Non-Dollar linkers

Underlying our strategies, a research process identifies repeatable patterns and other forms of market inefficiencies. Our portfolios concentrate on a small number of securities.

We measure and manage the risk of our U.S. TIPS Strategy relative to the benchmark, adhering to preset duration contribution limits for individual trading strategies and in aggregate. Exposures are assigned in a diversified fashion to avoid dependence on any single strategy.

We ensure both a well-controlled trading platform and compliance with client guidelines through a comprehensive enterprise risk management framework that includes an automated front-end trading system, independent senior management compliance oversight, and formal weekly portfolio reviews.  

What Makes Us Different?

  • Pure-Play: Active management implemented in the U.S. TIPS market without the use of credit exposure.
  • Team Continuity: Our TIPS Portfolio Management team has been together for more than 10 years, accumulating decades of combined tenure at BBH.
  • Risk Management: Our risk management framework has allowed us to meet our return objectives at below-market risk levels.
 

How to Invest

Our Inflation-Indexed Fixed Income can be accessed through a variety of investment vehicles. To learn more please contact a member of our institutional relationship management team.
 
 

John Ackler

Senior Vice President
New York City, NY | USA

As a Fixed Income Product Specialist, John Ackler is responsible for overseeing many of the firm’s US institutional fixed income client and consultant relationships. John also participates in…  Learn More

Our Team

Our Latest Insights

Performance and Portfolio Characteristics

  Composite Performance as of 3/31/2021
Inflation-Indexed Fixed Income
Total Returns
Average Annual Total Returns
Composite/Benchmark
3 Mo.
  YTD  
1 Yr.
3 Yr.
5 Yr.
10 Yr.
Since Inception
(04/01/1997)
BBH Inflation-Indexed Fixed Income Composite
(Gross of Fees)
-1.26%
-1.26% 7.21% 5.68%
3.91% 3.68% 5.77%
BBH Inflation-Indexed Fixed Income Composite
(Net of Fees)
-1.30% -1.30% 7.06% 5.52% 3.75% 3.52% 5.61%
Bloomberg Barclays US TIPS Index
-1.47% -1.47% 7.54% 5.67% 3.86% 3.44% 5.38%

Past performance does not guarantee future results.  

Bloomberg Barclays U.S. TIPS Index includes all publicly issued, U.S. Treasury inflation-protected securities that have at least one year remaining to maturity, are rated investment grade, and have $250 million or more of outstanding face value. This index is not available for direct investment.

 Portfolio Characteristics as of 3/31/2021
Inflation-Indexed Fixed Income
  Representative Account Benchmark
 Effective Duration (years)
7.28
7.63

Yield to Maturity
-1.56% -1.44%

Portfolio holdings and characteristics are subject to change. 

Portfolio Characteristics are of the Representative Account. The Representative Account is the account whose investment guidelines allow the greatest flexibility to express active management positions. It is managed with the same investment objectives and employs substantially the same investment philosophy and processes as the Inflation-Indexed Fixed Income strategy. 

Gross of fee performance results for this composite do not reflect the deduction of investment advisory fees. Actual returns will be reduced by such fees. Net of fees performance reflects the deduction of the maximum investment advisory fees.  Returns include all dividends and interest, other income, realized and unrealized gain, are net of all brokerage commissions, execution costs, and without provision for federal or state income taxes. Performance is calculated in U.S. dollars.

The BBH Inflation-Indexed Fixed Income Strategy was previously called the BBH Inflation-Indexed Securities Strategy.

Effective duration is a measure of the portfolio’s return sensitivity to changes in interest rates.

Yield to Maturity is the rate of return the portfolio would achieve if all purchased bonds and derivatives were held to maturity, assuming all coupon and principal payments are received as scheduled and reinvested at the same yield to maturity. This figure is subject to change and is not meant to represent the yield earned by any particular security. Yield to Maturity is before fee and expenses.

This communication is for informational purposes only and does not constitute an offer or a solicitation to buy or sell any particular security or to adopt any specific investment strategy. The information herein has not been based on a consideration of any individual investor’s circumstances and is not investment advice, nor should it be construed in any way as tax, accounting, legal or regulatory advice.  Any views and opinions are subject to change at any time.

Strategies are shown without regard to whether they are offered as separately managed account mandates or through pooled vehicles.  Any discussion of or reference to any given strategy herein should not be taken as a recommendation or solicitation of any pooled vehicle which has an investment objective featuring or similar to such strategy.

This material does not constitute an offer or solicitation in any jurisdiction where or to any person to whom it would be unauthorized or unlawful to do so.

Risk Considerations

There is no assurance that a portfolio will achieve its investment objective or that the strategy will work under all market conditions.  The value of the portfolio can be affected by changes in interest rates, general market conditions and other political, social and economic developments.  Each investor should evaluate their ability to invest for the long-term, especially during periods of downturn in the market.

Investing in the bond market is subject to certain risks including market, interest-rate, issuer, credit, maturity, call and inflation risk; investments may be worth more or less than the original cost when redeemed.  Bond prices are sensitive to changes in interest rates and a rise in interest rates can cause a decline in their prices.

Foreign investing involves special risks including currency risk, increased volatility, political risks, and differences in auditing and other financial standards.

The strategy may also invest in derivative instruments, investments whose values depend on the performance of the underlying security, assets, interest rate, index or currency and entail potentially higher volatility and risk of loss compared to traditional stock or bond investments.

NOT FDIC INSURED ● NO BANK GUARANTEE ● MAY LOSE VALUE

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