CS McKee and Red Cedar’s Core Plus Bond Strategy: Attractive Rates of Current Income and Active Management Uncovering Value
Mark Goodwin, Chief Executive Officer of North Square Investments, Brian Allen, Chief Investment Officer with CS McKee, and John Cassady, Co-Chief Investment Officer with Red Cedar Investment Management discuss the fixed-income market and the advantages these two portfolio management teams bring to North Square’s Core Plus Bond strategy.
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This podcast was recorded December 17, 2024. The opinions expressed herein are those of North Square Investments, LLC (North Square) and are subject to change without notice. The opinions referenced are as of the date of publication/distribution, may be modified due to changes in the market or economic conditions, and may not necessarily come to pass. Forward looking statements cannot be guaranteed. The discussions in our podcasts are for general informational purposes only and should not be considered as investment advice. The inclusion and performance of specific investments discussed represent only a sample of North Square’s Fund investments, and do not represent North Square’s Fund investments or performance as a whole. A complete list of North Square’s holdings is available upon request. There is no guarantee that any investments discussed at the time of this podcast will remain in North Square’s Fund(s). Past performance is not indicative of future results. It should not be assumed that any of the securities or companies discussed have been or will be profitable, or that investment recommendations or decisions we make in the future will be profitable. Nothing discussed herein constitutes an offer or recommendation to buy or sell a particular security or investment strategy. North Square reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs. There is no guarantee that North Square’s assessment of investments will be correct. The discussions, outlook, and viewpoints featured are not intended to be investment advice and do not take into account any specific investment objectives or risk tolerance you may have. Some information contained herein derives from third-party sources North Square believes to be reliable; however, accuracy and completeness cannot be guaranteed. Some material discussed represents an assessment of the market environment regarding a specific security or industry at a particular point in time and is not intended to be a forecast of future events or a guarantee of future results. The investment strategy or strategies discussed may not be suitable for all investors. Investors must make their own decisions based on their specific investment objectives and financial circumstances. No assurance, representation, or warranty is made by any person that any of North Square’s assumptions, expectations, objectives and/or goals will be achieved. Nothing contained in the podcast may be relied upon as a guarantee, promise, assurance, or representation as to the future. This discussion, including any hypothetical illustrations, are intended to form a basis for further discussion with your legal, accounting, and financial advisors. Actual future investment returns, taxes and inflation are unknown. Do not rely upon this podcast to predict future investment performance. North Square is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. More information about the companies’ investment advisory services can be found in their respective form ADV, which are available upon request.
For a list of holdings, standardized fund performance, prospectus and risks, please click here.
Principal Risks of Investing, North Square Core Plus Bond Fund: Risk is inherent in all investing, including an investment in the Fund. An investment in the Fund involves risk, including, the following principal risks, among others: Market Risk, Credit Risk, Fixed Income Securities Risk, Interest Rate Risk, Preferred Securities Risk, Mortgage-Backed and Asset-Backed Securities Risk, Collateralized Loan Obligations Risk, Bank Loan Risk, High Yield (“Junk”) Bond Risk, Financials Sector Risk, Foreign Investment Risk, Derivatives Risk, Yield Curve Risk, and Gap Risk. Summary descriptions of these and other principal risks of investing in the Fund are set forth in the Fund’s prospectus. Before you decide whether to invest in the Fund, carefully consider these risks associated with investing in the Fund, which may cause investors to lose money. There can be no assurance that the Fund will achieve its investment objectives. An investment in the Fund is not a deposit of the bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Please see the Fund’s prospectus for additional risk disclosures.
The Fund’s portfolio is actively managed and current holdings and characteristics may be different than those mentioned in this podcast. The holdings cited should not be considered recommendations to buy or sell any particular security. The holdings identified do not represent all of the securities purchased or sold. Actual portfolio investments may vary when actually invested. A complete list of holdings is available upon request.
Past performance does not guarantee future results. Click here for standardized performance information.
Bond ratings are grades given to bonds that indicate their credit quality as determined by private independent rating services such as Standard & Poor’s, Moody’s and Fitch. These firms evaluate a bond issuer’s financial strength, or its ability to pay a bond’s principal and interest in a timely fashion. Ratings are expressed as letters ranging from `AAA’, which is the highest grade, to `D’, which is the lowest grade. Investment-Grade refers to a bond considered investment grade if its credit rating is BBB- or higher. Below Investment-Grade refers to a security that is rated below BBB-.
Definitions of terms used in this podcast:
Basis points, otherwise known as “bps,” are a unit of measure used in finance to describe the percentage change in the value or rate of a financial instrument. One basis point is equivalent to 0.01% (100 basis points = 1.0 percent).
Duration is defined as the average maturity of all bond payments, where each payment is weighted by its value. In fixed income investing, duration is an essential tool for risk management, as it measures the sensitivity of an asset price to movements in yields.
The yield curve shows the interest rates that buyers of government debt require in order to be willing to lend their money over various periods of time — whether overnight, for one month, 10 years or even longer. An inverted yield curve is considered to be unusual; it reflects bond investors’ expectations for a decline in longer-term interest rates, typically associated with recessions.
A collateralized loan obligation, or “CLO” is a debt security that’s made up of a group of loans, or a portfolio, that are repackaged and sold to investors.
The Bloomberg US Aggregate Bond Index is a broad base, market capitalization-weighted bond market index representing intermediate term investment grade bonds traded in the United States. One cannot invest directly in an index.
A credit spread is the difference in yield between two debt securities of the same maturity but different credit quality.
A bond’s coupon is the interest payment made to a bondholder from the time the bond is issued until it matures. Coupons are expressed as s a percentage of the face value and are paid from the issue date until maturity.
In the context of bonds, “carry” refers to the net income an investor receives from holding a bond, and is essentially the difference between the coupon payment (the interest received by the investor) and the cost of borrowing the money to buy the bond.
Net interest margin is a financial metric that measures the difference between the interest a financial institution earns and the interest it pays out.
CMBS stands for Commercial Mortgage-Backed Securities, which are a type of fixed-income investment that’s backed by mortgages on commercial properties. CMBS loans are a common way to finance commercial real estate projects in the United States.
Negative convexity risk is the risk that a bond’s price will decrease as its yield increases.
The CBOE Volatility Index (VIX), also known as the Fear Index, measures expected market volatility using a portfolio of options on the S&P 500.
The MOVE Index, otherwise known as the “VIX of bonds,” helps investors track volatility across U.S. Treasuries. Sometimes, it can signal future action in equities.
Asset-backed securities (ABS) are a type of credit instrument, or bond, that are used in fixed income investments. ABS are bonds that are secured by a pool of assets, such as loans, that produce regular interest payments.
PCE stands for Personal Consumption Expenditures, which is a measure of the amount of money spent by U.S. residents on goods and services. It is a key indicator of consumer spending in the U.S. economy.
Before investing you should carefully consider the Fund’s investment objectives, risks, charges and expenses. This and other information is in the prospectus, a copy of which may be obtained by calling 855-551-5521. Please read the prospectus carefully before you invest.
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