Vertical Income Portfolio

  • Overview

    Overview

    The Eagle Vertical Income Portfolio aims to maximize an investor’s yield potential by utilizing a capital-structure agnostic approach.

    Investment Process

    The Vertical Income Portfolio seeks to generate yields greater than the Consumer Price Index (CPI) + 2 percent. The portfolio primarily consists of investment-grade corporate bonds, but the investment team will opportunistically invest in a company’s common stock or preferred securities when either of these asset classes provide greater income potential than a company’s debt securities. When the investment team is comfortable with a company, it will generally invest in the highest yielding asset class — bonds, preferred securities, common stocks — in that corporation’s capital structure. The income target over a full market cycle is Consumer Price Index (CPI) + 2 percent*.

    *There is no guarantee that the investment goals/objectives will be met.

    Portfolio Characteristics

    Portfolio

    Vertical Income Portfolio

    Benchmark

    Bloomberg Barclays U.S. Corporate Index

    Typical Market
    Capitalization

    $2 billion or greater
    (for the equity portion of the portfolio)

    Account Minimum

    $250,000

    Typical Turnover

    Less than 20%

    Typical Number
    of Holdings

    50 to 70

  • Investment Team

    Vertical Income Portfolio Investment Team

    James Camp

    James C. Camp, CFA

    Managing Director, Portfolio Manager

    29 Years Of Industry Experience

    21 Years With Eagle Asset Management

    Joseph Jackson

    Joseph Jackson, CFA

    Portfolio co-Manager & Senior Credit Analyst

    19 Years Of Industry Experience

    14 Years With Eagle Asset Management

    Brad Erwin

    Brad Erwin, CFA

    Portfolio co-Manager

    23 Years Of Industry Experience

    10 Years With Eagle Asset Management

    John Lagowski

    John Lagowski, CFA

    Research Analyst

    11 Years Of Industry Experience

    3 Years With Eagle Asset Management

  • Performance

    Performance1 as of September 30, 2018

        Current
    Quarter
    Year
    to Date
    One
    Year
    Since Inception
    (Oct. 1, 2016)

    Eagle Vertical Income Portfolio

    Gross

    0.98%

    -0.90%

    0.36%

    1.98%

    Eagle Vertical Income Portfolio

    Net

    0.68%

    -1.91%

    -0.89%

    0.60%

    Bloomberg Barclays Corporate Index

     

    0.97%

    -2.33%

    -1.19%

    0.50%


    Compounded, Annualized Rates of Return Net of Fees as of September 30, 2018

    Year Percentage $100,000 Compounded

    1

    -0.89%

    $99,111

    Since Inception (Jan. 1, 2013)

    0.60%

    $101,204


    Risk Information
    The risks associated with International investing are based on the expectation of positive price performance due to continued earnings growth or anticipated changes in the market or within the company itself. However, if a company fails to meet that expectation or anticipated changes do not occur, its stock price may decline. Moreover, as with all equity investing, there is the risk that an unexpected change in the market or within the company itself may have an adverse effect on its stock. Investing in growth-oriented stocks involves potentially higher volatility and risk than investing in income-generating stocks. The biggest risk of equity investing is that returns can fluctuate and investors can lose money.

    Not every investment opportunity will meet all of the stringent investment criteria mentioned to the same degree. Trade-offs must be made, which is where experience and judgment play a key role. Accounts are invested at the discretion of the portfolio manager and may take up to 60 days to become fully invested.

    Disclosures
    Starting Q4 2016 thru Q3 2017, net performance is calculated down from gross by 37.5bps. This is a result of the composite being currently represented by an account which does not pay any fees. Starting Q4 2018, net performance is actual. This is a result of the composite being represented by accounts which pay fees.

    Dividend investing is based upon the identification of companies that possess both moderate growth rates as well as higher-than-average and consistent dividend distributions. Historically, dividend yields have been relatively constant and therefore have created a cushion for investors when stock prices have declined. However, as with all equity investing, there is the risk that a company will not achieve its expected earnings results, or that an unexpected change in the market or within the company will occur, both of which may adversely affect investment results. The biggest risk of equity investing is that returns can fluctuate and investors can lose money. Not every investment opportunity will meet all of the stringent investment criteria mentioned to the same degree. Trade-offs must be made, which is where experience and judgment play a key role. Accounts are invested at the discretion of the portfolio manager and may take up to 60 days to become fully invested.

    Many investors consider bonds to be “risk-free” investment vehicles. Historically, bonds have indeed provided less volatility and less risk of loss of capital than has equity investing. However, there are many factors which may affect the risk and return profile of a fixed-income portfolio. The two most prominent factors are interest-rate movements and the creditworthiness of the bond issuer. The risk of a change in the market value of the investment due to changes in interest rates is known as interest-rate risk. Interest-rate risk is subject to many variables but may be analyzed based on various data (e.g., effective duration). The risk that the issuer may default on interest and/or principal payments is often referred to as credit risk. Credit risk is typically measured by ratings issued by ratings agencies such as Moody’s and Standard & Poor’s. Bonds issued by the U.S. Government have significantly less risk of default than those issued by corporations and municipalities (see below for a discussion of the risk associated with convertible securities). However, the overall return on Government bonds tends to be less than these other types of fixed-income securities. Finally, reinvestment risk is the possibility that the proceeds of a maturing investment must be invested in a lower yielding security, all other things held constant, due to changes in the interest-rate environment. Investors should pay careful attention to the types of fixed-income securities which comprise their portfolio, and remember that, as with all investments, there is the risk of the loss of capital.

    Convertible securities and preferred stock combine the fixed characteristics of bonds with some of the potential for capital appreciation of equities and thus may be subject to greater risk than pure fixed-income instruments. Unlike bonds, preferred stock and some convertible securities do not have a fixed par value at maturity, and in this respect may be considered riskier than bonds. Convertible securities may include convertible bonds, convertible preferred stocks and other fixed-income instruments which have conversion features. The lower rating of high-yield bonds (less than investment-grade) reflects a greater possibility that the financial condition of the issuer or adverse changes in general economic conditions may impair the ability of the issuer to pay income and principal. Periods of rising interest rates or economic downturns may cause highly leveraged issuers to experience financial stress, and thus markets for their securities may become more volatile. Moreover, to the extent that no established secondary market exists, there may be thin trading of high-yield bonds, which increases the potential for volatility.

    Duration incorporates a bond’s yield, coupon, final maturity and call features into one number, expressed in years, that indicates how price-sensitive a bond or portfolio is to changes in interest rates. Bonds with higher durations carry more risk and have higher price volatility than bonds with lower durations.

    High-yield (below investment-grade) bonds are not suitable for all investors. The lower rating of high-yield bonds reflects a greater possibility that the financial condition of the issuer or adverse changes in general economic conditions may impair the ability of the issuer to make income and principal payments. To the extent that no established secondary market exists, there may be thin trading of high-yield bonds, which increases the potential for volatility.

    Dividend yields in this presentation are presented as indicated by the current rate of dividend payout divided by the current stock price.

    Investment-grade refers to fixed-income securities rated BBB or better by Standard & Poor’s or Baa or better by Moody’s.

    Quality ratings are used to evaluate the likelihood of default by a bond issuer. Moody’s Investors Service, or another independent rating agency, analyzes the financial strength of each bond’s issuer. Their ratings range from Aaa (highest quality) to C (lowest quality). Bonds rated Baa3 and better are considered “investment-grade” bonds. Bonds rated Ba1 and below are considered “below investment grade” bonds.

    Past performance does not guarantee or indicate future results. No inference should be drawn by present or prospective clients that managed accounts will achieve similar performance in the future. Investment in a portfolio, investment manager or security should not be based on past performance alone. Because accounts are individually managed, returns for separate accounts may be higher or lower than the average performance stated. Individual portfolio/performance results may vary due to market conditions, trading costs and certain other factors, which may be unique to each account. There is no guarantee that these investment strategies will work under all market conditions, and each investor should evaluate their ability to invest for the long term, especially during periods of downturn in the market. Investing in equities may result in a loss of capital. Investing involves risk and you may incur a profit or a loss. Investment returns and principal value will fluctuate so that an investor’s portfolio, when redeemed, may be worth more or less than their original cost. Diversification does not ensure a profit or guarantee against a loss.

    The calculation of the performance data includes reinvestment of all income and gains and is depicted on a time-weighted and size-weighted average for the entire period. Calculations include reinvestment of all income and gains. Gross performance presented is "pure gross" and is shown before deduction of any fees. Net returns have been reduced by the entire bundled/wrap fee. The bundled/wrap fee will typically include trading, investment management, portfolio monitoring and other administrative fees charged by the sponsor. Eagle's fees are set forth in Eagle's ADV, Part II. Over a period of five years, an advisory fee of 1% could reduce the total value of a client's portfolio by 5% or more.

    Eagle Asset Management, Inc. ("Eagle") claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS Standards. Eagle has been independently verified for the periods from January 1, 1982 to December 31, 2017. Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm’s policies and procedures are designed to calculate and present performance in compliance with the GIPS standards. The verification and performance examination reports are available upon request.

    Eagle Asset Management, Inc. is an investment adviser registered with the Securities and Exchange Commission and is engaged in providing discretionary management services to client accounts. The benchmark is the Bloomberg Barclays Corporate Index, which has been derived from published sources and has not been examined by independent accountants.

    Currency: all monetary amounts displayed on this website are in U.S. dollars.

    To obtain a compliant presentation and/or the firm's list of composite descriptions, please contact Eagle Asset Management at 1.800.237.3101.

    Index Definition
    The Bloomberg Barclays Corporate Index represents U.S. corporate bonds.

    Index returns do not reflect the deduction of fees, trading costs or other expenses. Indices are unmanaged, and one cannot invest directly in an index. Index returns do not reflect the deduction of fees, trading costs or other expenses. The index is referred to for comparative purposes only and the composition of an index is different from the composition of the accounts included in the performance shown. Indices are unmanaged and one cannot invest directly in the index.

  • Literature

    Documents available for download


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