fixed income management - garcia hamilton & associates · city of hollywood ff, fl city of st....

Fixed Income ManagementQuarter Ended March 31, 2016

5 Houston Center

1401 McKinney, Suite 1600

Houston, TX 77010

Tel: (713) 853-2359

Fax: (713) 853-2300

[email protected]

www.GarciaHamiltonAssociates.comAwards/rankings may not represent client experiences and are not indicative of future performance. Go to www.garciahamiltonassociates.com/awards/ for additional information on each award.

Presented By:

Gilbert A. Garcia, CFAManaging Partner

http://www.garciahamiltonassociates.com/awards/

Organization

1

Asset Breakdown

Founded in 1988.

Firm is 100% employee-owned and certified as a MBE firm.

Firm has 28 employees located in Houston, Texas.

The 9 members of the fixed income investment team have 168 years combined investment experience and

over 77 years combined with the firm. In addition, 5 are Chartered Financial Analyst (CFA) charterholders.

Firm manages almost $7.0 billion in fixed income assets for over 230 institutional clients.

High quality fixed income strategies designed to prevent “negative surprises.”

No litigation. No debt.

Data as of March 31, 2016

Other

1%

Corp Retirement

9%

Insurance

3%

Corp Non-Erisa

10%

Endowment/

Foundation

6%

Jointly Trusteed

3%

Public

68%

By Client

Fixed Income

Aggregate

66%

Fixed Income

Short Duration

1%

Fixed Income

Intermediate

Govt/Credit14%

Fixed Income

Enhanced Cash

5%

Fixed Income

Intermediate

Aggregate5%

Other Fixed

Income Products

6%Quality Growth

Equity

3%

By Type

Partners

2

GILBERT ANDREW GARCIA,

CFA

Managing Partner

Fixed Income Portfolio Manager

BA: Yale University

Year Hired: 2002

Industry Experience: 31 yrs

Ownership: 46%

JANNA HAMILTON

Partner

Marketing and Client Service

BA: Florida Atlantic University

AIMSE: Wharton School of Business

Year Hired: 1994


Ownership: 23%

CURT ROHRMAN, CFA

Partner

Equity Portfolio Manager

BBA: Texas Christian University

MBA: University of Texas

Year Hired: 2006


Ownership: 7%

KEVIN LUNDAY, CPA

Partner

Chief Operating Officer

BBA: Texas Tech University

Year Hired: 2007


Ownership: 8%

BETH L. MCWILLIAMS

Partner

Chief Compliance Officer

Patricia Stevens Secretarial

College

Year Hired: 1994


Ownership: 6%

STEPHANIE J. ROBERTS

Partner

Marketing and Client Services/

Investments

BBA: Texas Southern University

Year Hired: 2000


Ownership: 2%

RUBY MUÑOZ DANG

Partner

Director of Marketing and

Client Services

BA: University of Houston

Year Hired: 1995


Ownership: 4%

NANCY RODRIGUEZ

Partner


BS: University of Houston

Year Hired: 1998


Ownership: 4%

Fixed Income Investment Team

3

GILBERT ANDREW GARCIA, CFA

Managing Partner


BA: Yale University

Year Hired: 2002


NANCY RODRIGUEZ

Partner



Year Hired: 1998


Coverage: Team Oversight

JEFFREY D. DETWILER, CFA


BS: University of South Florida

MS: University of Houston

Year Hired: 2007


Coverage: Corporates

KAREN H. TASS, CFA


BA: Texas A&M University

MBA: University of Houston

Year Hired: 2010


Coverage: MBS/Agencies

DON ELSENBROCK



MA: University of Houston

Year Hired: 2014


Coverage: Short Term/Cash Flows

BENJAMIN D. MONKIEWICZ

Investment Analyst

BA: Sam Houston State University

Year Hired: 2010


Coverage: Short Term

JOHN A. LOHMAN, CFA

Quantitative Strategist

BBA: Loyola University

MBA: University of Texas

Year Hired: 1995


Coverage: Modeling

KELLY NILAND, CFA, CPA

Investment Analyst

BBA: Texas A&M University

Year Hired: 2015


Coverage: Yield Curve

CONNIE FALCON DAVIS

Investment Associate


Year Hired: 2012


Coverage: Analytics

Garcia Hamilton & Associates Timeline

4Awards/rankings may not represent client experiences and are not indicative of future performance. Go to www.garciahamiltonassociates.com/awards/ for additional information on each award.

•Firm was founded and Fixed Income philosophy developed. 1988

•Became an affiliate of AMG (Affiliated Managers Group, Inc.).1998

•Gilbert Garcia joined and assumed portfolio management duties, and Nancy Rodriguez was reassigned to work with him. 2002

•Began transition from founders to next generation of partners. 2006

•Crossed $1 billion under Fixed Income management.

•Internal partners acquired majority interest from AMG. 2008

•Firm was named Core Fixed Income Manager of the Year by Emerging Manager Monthly.

•Internal partners acquired remaining interest from AMG.

•Firm name changed to Garcia Hamilton & Associates. 2010

•Crossed $2 billion in Fixed Income assets under management. 2011

•Named 2014 Fixed Income Investment Grade Manager of the Year by Institutional Investor.


•Named 2015 Intermediate-Term Fixed Income Manager of the Year by Institutional Investor.


•Named 2016 Intermediate-Term Fixed Income Manager of the Year by Institutional Investor.

•Crossed $7 billion in Fixed Income assets under management.

•Launched mutual fund product with American Beacon Advisors. 2016

http://www.garciahamiltonassociates.com/awards/

Public Funds City of New Port Richey Police, FL City of West Palm Beach Police, FL Sulzer Pumps (US) Inc., TX

City of Annapolis Police and Fire, MD City of North Miami Beach GE, FL City of West Palm Beach GE, FL Woodlands Family Practice, TX

Arkansas State Highway Employees, AR City of North Miami Beach Police & FF, FL City of West Palm Beach FF, FL

Arkansas Local Police & Fire, AR Northern Marianas College, MP City of Wilton Manors Police & GE, FL Endowments/Foundations

City of Atlanta Police, GA City of Oakland Park Police & FF, FL City of Winston-Salem, NC Arkansas State University Foundation, AR

City of Atlanta Fire, GA City of Ocoee Police & FF, FL City of Winter Garden GE, FL Arkansas Tech University Foundation, AR

Town of Bay Harbor Islands GE, FL Oklahoma FF, OK City of Winter Garden Police & FF, FL Baptist Health Foundation of San Antonio, TX

City of Bloomington Police, IL Town of Orange Park Police, FL City of Winter Haven Police, FL Board of Higher Education and Ministry,

City of Boynton Beach GE, FL City of Ormond Beach Police, GE & FF, FL Yap State Trust Fund, FM The United Methodist Church, TN

City of Cape Coral Municipal Firefighters, FL City of Palm Beach Gardens FF, FL Yorktown Independent School District, TX Briarwood-Brookwood, Inc., TX

City of Cape Coral Police, FL Palm Beach County FF, FL Children's Home Foundation, TX

Chicago Public Schools, IL Village of Palm Springs GE, FL Corporate Non-ERISA Children’s Home Society of Florida, FL

Chicago Transit Authority, IL Village of Palm Springs Police, FL American Baptist Home Mission Society, PA Christ Church Cathedral Endowment, IN

College of Micronesia Land Grant, FM City of Pembroke Pines OPEB Trust, FL American Speech-Language-Hearing Association, MD Coast Guard Foundation, CT

City of Coral Springs FF, FL City of Pensacola FF, FL American Quarter Horse Association, TX Dogwood Foundation, TX

City of Coral Springs Police, FL City of Pensacola GE, FL Archdiocese of Portland, OR E. Rhodes and Leona B. Carpenter Foundation, PA

City of Corpus Christi FF, TX City of Pinellas Park GE, FL Attorney’s Liability Assurance Society, IL Embry Riddle Aeronautical University, FL

Dallas Area Rapid Transit, TX City of Pinellas Park Police, FL Brazosport Regional Health System, TX Florida A&M University Foundation, FL

City of DeLand Police, FL City of Philadelphia GE, PA Center for Hearing and Speech Foundation, TX Fort Hays State University, KS

Town of Davie Police, FL Philadelphia Gas Works, PA Century Insurance Company, Ltd., GU Guam Community College Foundation, GU

Town of Davie FF, FL City of Plantation Police, FL CPS Energy, TX Hartford Foundation for Public Giving, CT

City of Deerfield Beach Police, FL City of Pontiac Police & FF, MI Crime Stoppers of Houston, TX Heartspring Methodist Foundation, TX

Dukes County, MA Prince George’s County FF, MD District of Columbia Bar, DC International Retinal Research Foundation Inc., AL

Employees of H.N.S. Management, CO., Inc., CT Prince George’s County Police, MD Episcopal Diocese of Alabama, AL Louisiana Baptist Foundation, LA

Employees' Retirement System of City of Punta Gorda GE, FL John P. McGovern Museum of Health & Marin Community Foundation, CA

Baltimore County, MD City of Punta Gorda Police, FL Medical Science, TX Medical University of South Carolina Foundation, SC

Employee’s Retirement Fund of the City of Dallas, TX Republic of Palau Civil Service KEW Management Investor, NY Midwestern State University Foundation, TX

City of Evanston Police, IL Republic of Palau COFA Trust Fund The Medical Foundation of North Carolina, Inc., NC Rio Grande Cancer Foundation, TX

Fairfax County Uniformed Retirement System, VA City of Riviera Beach Police, FL Micronesia Conservation Trust, FM Sarah Campbell Blaffer Foundation, TX

FSM Social Security Administration, FM Road Commission for Oakland County New York Power Authority NDT, NY Shelby County Community Health Foundation, AL

City of Ft. Lauderdale GE, FL Retiree Health Care Trust, MI FSM Development Bank, FM Silicon Valley Community Foundation, CA

City of Ft. Lauderdale, FL City of Roanoke, VA Oregon Climate Trust, OR Southern Baptist Foundation, TN

City of Ft. Walton Beach GE, FL City of Rockledge FF, FL Rollins, Inc., GA Tallahassee Memorial HealthCare Foundation, FL

City of Ft. Walton Beach Police, FL City of Rockledge GE, FL Roman Catholic Archdiocese of Atlanta, GA Trinity Episcopal Church, LA

City of Ft. Walton Beach Firefighters, FL City of Rockledge Police, FL Russell Hill Rogers Fund for the Arts, TX United Methodist Foundation, NC

Georgia-Alabama Land Trust, Inc., AL City of Sanford FF, FL Specialty Equipment Market Association, CA University of Guam Endowment, GU

Government of Guam, GU City of Sanford Police, FL Stetson University, Inc., FL White’s Residential & Family Services, IN

City of Hialeah FF, FL City of Sebring Police, FL Takecare Insurance Risk Management Services, GU Whichita Falls Area Community Foundation, TX

City of Hollywood FF, FL City of St. Cloud GE, FL Terrapin Insurance Company, CI

City of Hollywood Police, FL City of St. Cloud Police, FL United Regional Health Care System, TX Taft – Hartley & Union

Illinois Municipal Retirement Fund, IL City of St. Louis FF, MO Bricklayers Gulf Coast, TX

Illinois State Board of Investments, IL South Walton Fire Control District FF, FL Corporate ERISA District 1199J New Jersey Healthcare Employers, NJ

Jackson County GE, MI State Universities RS, IL AGL Resources, GA IBEW Local Union #129, OH

City of Jacksonville Beach Employee RS, FL City of Sunrise Police, FL Baptist Health Retirement Plan, AR IBEW Local Union #351, NJ

City of Lake Worth FF, FL City of Tamarac FF, FL D.W. McMillan Hospital/ Escambia County Healthcare, AL MARTA/ATU Local 732, GA

City of Lakeland Employees’ Pension & RS, FL City of Tarpon Springs Police, FL Flowers Foods, Inc., GA Plumbers Local #68, TX

Lantana FF, FL Teachers’ Retirement System, IL Integris Health, Inc., OK Sacramento Area Electrical Workers, CA

Lantana Police Relief, FL City of Temple Terrace Police & FF, FL International-Matex Tank Terminals, LA San Mateo HERE, CA

Lemont Police, IL Village of Tequesta Public Safety Officers, FL Millers Group, TX Southern California Sheet Metal Workers, CA

Marianas Public Land Trust, MP City of Titusville Police & FF, FL Nicor Companies, GA Teamsters Union Local NO. 35, NJ

City of Melbourne Police & FF, FL Utrik Atoll, Marshall Islands (MH) Nissan Motor Co., Ltd., TN

City of Miramar Police, FL City of Venice FF, FL Roman Catholic Archdiocese of Atlanta, GA Other

NC Association of County Commissioners, NC City of Vero Beach Police, FL RPC, Inc., GA Monteagle Quality Growth Fund

NC League of Municipalities, NC City of West Melbourne Police, FL STP Nuclear Operation Company, TX Progress Investment Management, CA

5

Representative Client List

Clients who have retained GH&A for 10 years or more are noted in green. This representative client list is provided for informational purposes only and should not be construed as an endorsement of ourservices. These clients were chosen for name recognition and may be invested in products other than those included in the presentation.

Investment Philosophy

Investment Philosophy

• Fixed income anchors the asset allocation, allowing clients to take risk in other

asset classes. It is not meant to be the significant alpha generator.

• Because individual credits, industry groups and broad sectors are highly

correlated, credit research adds little long term value to high quality fixed

income management. Thus, effective investment management utilizes a top-

down management approach with a concentrated portfolio.

6

Investment Goal

Investment Goal

Our goal is to outperform the benchmark, net of fees, over a full market cycle

using a high quality strategy with less risk, lower volatility and low turnover. By

setting realistic expectations, we avoid taking unnecessary risks.

Achieving our goal is centered around several core principles:

Preserve Principal

Maintain Liquidity

Provide High Current Income

Key Tools:

Sector Rotation

Controlled Interest Rate Anticipation

Yield Curve Positioning

7

Investment Style

High QualityPortfolio Dominated by U.S. Treasuries, Agency Debentures and Agency15-Year MBS

Corporate Securities Rated A or Better

Spread Product Exclusively in the Short to Intermediate Maturities to Reduce Volatility

No Big SurprisesNo Foreign Bonds/Yankees

No BBB Rated Securities

No Derivatives

No Leverage/ Dollar Rolls

No Soft Dollars

FlexibilityActively Rotating Sectors

Actively Managing Yield Curve

Exploiting Smaller Markets

Risk ControlsPropriety Models (Liquidity, Spread)

Propriety Software (Duration Contribution by Sectors)

8

Implementation

Fundamental

Research and

Analysis

Qualitative

Model Review

Quantitative

Portfolio

Construction

Risk Control

Review five factors (Sentiment, Monetary, Economic, Valuation,Inflation) and historical data.

Review liquidity, and spread models versus GH&A’s qualitativefindings.

Set target portfolio ranges for duration (±10% of the index), yield curve (barbell, ladder, bullet), sector exposure (treasuries, agencies, corporates, MBS), and sector duration contribution (overweight, underweight).

Continuously monitor portfolios for market exposure, guidelinechanges, cash needs, brokerage activity and compliance.

9

Fixed Income Aggregate Portfolio Characteristics

The characteristics shown are those of an actual portfolio that is representative of this strategy at a particular point in time. Individual portfolio characteristics may vary depending on the date shown

as well as client-imposed restrictions, cash flows, etc. This information is supplemental to the Fixed Income Aggregate Composite Disclosure Statement in the Appendix.

PortfolioBarclays Capital Aggregate

March 31, 2016

10

Treasuries22%

Corporates14%

Agencies21%

Mortgages42%

Cash1%

Average YTM Average Coupon Average Duration

Portfolio 1.8 3.5 5.8

Barclays Capital Aggregate 2.2 3.2 5.4

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

Treasuries37%

Corporates25%

Agencies8%

Mortgages28%

Asset-Backed

2%



Barclays Capital Int. Govt./Credit 1.6 2.5 3.9

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

Fixed Income Intermediate Portfolio Characteristics

Treasuries57%

Corporates32%

Agencies11% Treasuries

49%

Corporates12%

Agencies11%

Mortgages28%

Cash<1%


as well as client-imposed restrictions, cash flows, etc. This information is supplemental to the Fixed Income Intermediate Composite Disclosure Statement in the Appendix.

Barclays Capital Int. Govt./Credit Portfolio

11

March 31, 2016



Barclays Capital 1-3 Year Govt. 0.8 1.5 1.8

0.0

0.5

1.0

1.5

2.0

2.5

3.0

Fixed Income Short Duration Govt. Portfolio Characteristics

Treasuries89%

Agencies11%

Treasuries36%

Agencies64%

Cash<1%


as well as client-imposed restrictions, cash flows, etc. This information is supplemental to the Fixed Income Short Duration Government Composite Disclosure Statement in the Appendix.

Barclays Capital 1-3 Year Govt. Portfolio

12

March 31, 2016

13

Diversity

Our firm directly supports numerous minority organizations in the community

•Our Managing Partner, Gilbert Garcia, served as Chairman of the Board for six years

•Our Partner and Director of Marketing and Client Services, Ruby Muñoz Dang, serves as Trustee for the METRO Texas Non-Union Pension Plan

Metropolitan Transit Authority of Harris County

•National Association of Securities Professionals is a non-profit association of professionals that brings together minorities and women in the fields of asset management, public finance, investment banking, and other finance professions

•Our Partner, Stephanie Roberts, is highly involved with the organization and recently started the Texas chapter

NASP

•Sponsors for Educational Opportunity is a non-profit organization that mentors young women and minority individuals in the development of careers in investment banking, corporate law, and other leading global companies

•Mr. Garcia is the longest serving board member (since 1988) and conducts interviews for candidates in our offices for placement within investment companies in New York

•Mr. Garcia was awarded the SEO Alumni Leadership Award at the 2015 Awards Dinner in New York City; Other honorees included Michael R. Bloomberg, three-term Mayor of New York City and Founder of Bloomberg LP & Bloomberg Philanthropies, and David M. Rubenstein, Co-Founder & Co-CEO of The Carlyle Group

SEO

•The League of United Latin American Citizens is a non-profit organization created to advance the economic condition, educational attainment, political influence, housing, health and civil rights of the Hispanic population of the United States

LULAC

Diversity is a central theme throughout the entire firm

• Certified as a MBE in several states

• Almost 85% of the firm owned by minority and female partners

• 53% owned by Hispanic partners and 55% owned by minority partners

• 70% of employees are ethnic minorities and women

• Execute over 35% of brokerage volume with MBE/MWBE veteran firms

• We also work with many minority and women-owned vendors in the areas of:

• Office Supplies, Temporary Staffing Services, Travel, Accounting, Auditors

• Gilbert Garcia was the 2012 Houston Area Urban League Gala Honorary Chair & a Co-Chair of the 103rd NAACP National Convention

Why Hire Garcia Hamilton & Associates?

100% Employee Owned

High Quality Focus

No Big Surprises

Flexibility

Proven Investment Process Over Time

Risk Controls

Strong Focus on Client Service

14

fixed income management - garcia hamilton & associates · city of hollywood ff, fl city of st....

Documents