SCM Advisors strives to add value in four ways:

1. disciplined interest rate anticipation
2. sector rotation
3. issue selection, and
4. opportunistic trading

Portfolios target the benchmark duration plus or minus 25%. The yield curve structure is actively managed with respect to changes in the shape and slope of the yield curve. The firm seeks to participate in areas of the curve which provide the highest return/risk potential, determined by internal yield spread analysis.

The team analyzes all major bond market sectors including governments, investment grade corporate bonds, mortgages, asset-backed securities, high yield securities and non-US bonds. Portfolio weightings are concentrated in those segments of the market which SCM Advisors projects will add the most value based on historical "rich/cheap" analysis, macroeconomic environment, flow of funds, and market volatility.

Within the context of issue selection, SCM Advisors analyzes the underlying issue risks, the particular security's cash flow and structure, and technical market conditions. Our credit analysis focuses on identifying companies with steady cash flows, strong interest coverage and probability for positive developments in their business profile. The analyst conducts a thorough evaluation with emphasis on business viability, liquidity and cash flow factors, financial flexibility, worst case scenarios, and covenant protection. Additionally, when analyzing structured product, such as MBS, CMOs and CMBS, we evaluate prepayment expectations, the structure's priorities to cash flow, collateral strength and downside protection.

Value is also added through opportunistic trading as mis-pricings, market dislocations, supply-demand imbalances, corporate restructuring news, M&A, and other special situations present themselves.

Approach and Process highlights

• Current income
• Capital preservation
• Value added through credit research and structure analysis
• Targeted duration
• Sector selection
• Issue selection
• Efficient trading