GCM combines an active investment approach with a disciplined investment strategy in order to best achieve the individual goals of our clients.
We generally utilize a macroeconomic approach to investing as a precursor to bottom-up security selection. In addition to monitoring a distinct set of macroeconomic indicators, we also identify business and economic cycle stages, recognizing that certain sectors outperform during specific cycle intersections. This top-down analysis is used to set our targeted asset allocation.
Our bottom-up analysis employs multiple analytic techniques, including fundamental and technical analysis, to ascertain which securities we will place in our portfolio. In doing so, we apply objective evaluation methods to various investments over specific time periods.
Our investment strategy is tilted towards an opportunistic value style of investing. However, any single style of investing can come under duress for prolonged periods of time due to the dynamic nature of markets.
As a result, disciplined strategic and tactical shifts are sometimes required. We firmly believe that as investment managers we should be able to adapt to changing market environments.
Event Driven Value & Special Situations
At times, market inefficiencies may arise that create opportunities for the nimble manager. Inefficiencies may come about from such events as spinoffs, mergers and acquisitions, or corporate restructuring. A temporary mispricing of securities provides value-based opportunities which we also pursue as a component of our process.
Tactical Asset Allocation
Over the longer term, investment markets are rational. However, periodically financial markets can be gripped by fear where emotion overrides rationality. During such times, we will make the decision to protect capital by temporarily reducing exposure to asset groups where the risk outweighs the reward.
The key to investing in attractively-valued securities is maintaining a strict discipline in: identifying possibilities, verifying that the possibilities are achievable opportunities, and targeting entry and exit points for an investment.
Our bond management begins by assessing key domestic and international macro-economic factors. This macroeconomic analysis serves as a foundation as we consider three primary top-down criteria:
1.) Duration Management Our duration decision is formulated by examining current interest rates and anticipated interest rate movements, potential inflation trends and monetary policy. Our goal is to provide our clients with a portfolio that carries lower interest rate sensitivity than the market.
2.) Yield Curve Analysis We position portfolios to optimize returns according to the expected changes in the yield curve based on historical intra-curve spread relationships. Our yield curve analysis may dictate a barbell, bullet, laddering, or indexing strategy.
3.) Sector Analysis We analyze historical yield spreads and credit risks. Our goal is to allocate to those sectors we believe may be undervalued in the marketplace, providing superior yield and the potential for security appreciation.