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 Philosophy
Rockwood Capital employs a consistent team-oriented approach
to fixed income portfolio management, research and trading.
Our philosophy focuses on the evaluation of various risk
premiums, with a particular emphasis on real yields –
the level of interest rates relative to expected inflation.
While numerous technical factors contribute to short-term
swings in bond prices, we believe the fundamental value
of any fixed income asset is primarily a function of
trends in inflation and inflation expectations. As such,
we focus on the root source of inflation trends — monetary
policy. In many ways, our research techniques parallel
those utilized by the staff of the U.S. Federal Reserve.
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 Process
Economic research provides the foundation for our systematic
five-stage portfolio modeling and risk management process.
Our strategy is frequently classified as a “top-down”
approach in which individual security selection is secondary
to overall portfolio structure. We employ a disciplined valuation
process and gradually adjust the interest rate sensitivity,
maturity structure, and sector allocation of portfolios to
preserve the real purchasing power of invested capital and
enhance long-term total returns. Junk bonds, derivatives
and currency bets are not our style. We firmly believe that
exceptional long-term performance can be attained without
sacrificing quality. We also recognize that high quality
bonds offer superior diversification relative to equity investments.
For every client portfolio we consistently maintain a superior
risk profile in terms of credit quality, liquidity, and stability
of cash flows. U.S. Government securities tend to dominate
portfolio holdings.
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