SLC Management provides customized strategies in a manner that is specific to the goals and objectives of each client, and is dependent upon such factors as funding ratio, allocation to fixed income, nature of the plan, plan sponsor risk capacity, risk budget and other risk management goals. Additionally, customization ranges from either a mix of Bloomberg Barclays benchmarks or managing the strategy against a Custom Liability Index, which is derived from a client’s specific liability term structure and typically priced using an investable Pension Protection Act methodology.
SLC Management has been managing customized Liability Driven Investing (LDI) fixed income strategies with a track record since 1991. This experience with actual implementation is a unique factor in the value provided by SLC Management. We manage fixed income portfolios against Custom Liability Indexes in a separate account or to a custom mix of Bloomberg Barclays benchmarks. Our systems and operations were built to deliver a turnkey solution to the client. All of investment team is involved in implementing LDI strategies in terms of philosophy, strategy, credit, research, asset management and the management of custom indexes.
The integration of asset management and liability management enables portfolio managers to manage beta and monitor risk including term structure, sector, duration and convexity as well as optimize return via the benchmark. As a repeatable process, our understanding and ability to deconstruct the index (liability or market indexes) and integrate this methodology as a risk process for asset management is a key driver in our success
The following three factors have guided the formulation of our investment philosophy:
- We use a repeatable process: We believe that bottom up security selection using a repeatable process creates value. We seek “upgrade” candidates and mispriced securities (particularly in securitized credit). We look for relative value at the issue level by examining historical relationships with comparative bonds and sub-sectors to isolate mean reversion trades in both structured and corporate credit. We take a neutral stance on interest rates.
- We are opportunistic: We believe in actively managing portfolios to seek relative value. We look for risk that is fundamentally or technically mispriced in order to find investment opportunities. Avoiding the downside is critical to outperformance, and we are willing to underweight any sector.
- Our team is integrated: We believe portfolios are best managed by nimble teams who integrate fundamental and technical credit analysis with portfolio management execution.