Security selection definition
Security selection. The advisor determines which issuers it believes offer the best relative value within each sector and then decides which available debt obligations of that issuer to purchase. The fund may invest in foreign debt obligations as well as cash or cash equivalents. The advisor generally will sell a debt obligation when, on a relative basis and in the advisor’s opinion, it will no longer help the fund attain its objective. Please be aware that you may lose money by investing in the fund. The following is a summary description of certain risks of investing in the fund. The advisor may err in its choices of debt obligations or portfolio mixes. Such errors could result in a negative return and a loss to you. A bond’s market value may be affected significantly by changes in interest rates – generally, when interest rates rise, the bond’s market value declines and when interest rates decline, its market value rises (“interest rate risk”). Interest rate risk should be low for the fund because it invests primarily in short term bonds, whose prices are less sensitive to interest rate changes than are the prices of long-term bonds. Generally, a bond with a longer maturity will entail greater interest rate risk but have a higher yield. Conversely, a bond with a shorter maturity will entail less interest rate risk but have a lower yield (“maturity risk”). A bond’s value may also be affected by changes in its credit quality rating or the issuer’s financial condition (“credit quality risk”). Bonds are also generally subject to credit risk that an issuer will not make timely payments of principal and interest. Debt obligations receiving the lowest investment grade rating may have speculative characteristics and, compared to higher grade debt obligations, may have a weakened capacity to make principal and interest payments due to changes in economic conditions or other adverse circumstances. Ratings are essentially opinions of the credit quality of an issuer and may prove to be inaccurate. Extension risk is the risk that debt obligations, including mortgage and asset backed debt obligations, will be paid off by the borrower more slowly than anticipated, increasing the average life of such debt obligations and the sensitivity of the prices of such debt obligations to future interest rate changes. No assurance can be given that the U.S. government will provide financial support to U.S. government sponsored agencies or instrumentalities where it is not specifically obligated to d...
Security selection. The advisor determines which issuers it believes offer the best relative value within each sector and then decides which available debt obligations of that issuer to purchase. Principal Risks Management Risks Bond Market Risks Credit Quality Risks
Security selection. Once the team has determined the percentage of the portfolio in any duration range or security type, individual securities are purchased to complete the portfolio structure. ▇▇▇▇▇▇▇▇’▇ investment team closely follows trends in the new issue market to take advantage of the cyclical swings in issuance in order to obtain attractive spreads over the risk-free Treasury rate. The seasoned professionals at ▇▇▇▇▇▇▇▇ are also well versed in the technical differences between various names in the investment universe, and frequently adjust the underlying name and sector exposure to take advantage of market anomalies only a skilled investor can consistently identify. Securities are subjected to a rigorous review process, including fundamental credit analysis, as well as quantitative analysis using proprietary tools. Our investment professionals recommend securities from an Approved Issuer List based on relative value considerations. In addition, our Credit Committee seeks to identify both improving and deteriorating credits so we can work to reposition client portfolios by seeking favorable and avoiding detrimental factors not yet understood by the majority of market participants. Analyzing the credit worthiness of individual issuers to enhance portfolio yields while minimizing exposure to credit and downgrade risk is a key element in mitigating risk and adding value in our clients’ portfolios.
Examples of Security selection in a sentence
Security selection, portfolio quality and the timing of purchases and sales are delegated to the Investment Manager.
Security selection risk: The securities in the fund’s portfolio may decline in value.