The Westwood Market Neutral Income strategy:

  • Is actively managed, utilizing a market-neutral approach to investing in convertible securities.
  • Seeks to produce absolute returns of 4-6% (net of fees), on an annualized basis over a full market cycle, with low volatility.
  • Incorporates a shorter-dated, yield-oriented portfolio and a convertible arbitrage strategy to construct the overall portfolio.
  • Enhances portfolio construction and reduces volatility through the active use of tail risk hedging strategies.
  • Controls risk by using a sophisticated convertible analytics system, KYNEX, as well as conducting a formal review on a monthly basis.

Performance

(As of 9/30/2017)

Inception date QTR YTD 1 yr 3 yr 5 yr Since Inception
Market Neutral Income Net of Fees (1/1/2010)  -0.09% 2.23%  2.13% 2.79% 3.41%  4.15%
LIBOR USD 1 Month    0.31%  0.78%  0.93% 0.50% 0.37%  0.33%

Investment Team

The five-person investment team, with an average of 15 years of industry experience, utilizes a team approach to portfolio management. The team also draws upon Westwood’s other investment professionals, including more than 20 fundamental research analysts covering global equity markets.

Portfolio Team

David B. Clott, CFA

Portfolio Manager

Shawn J. Mato, CFA, CAIA

Portfolio Manager

Brendan M. Ryan, CFA

Research Analyst

Seth A. Gold

Trading

Samantha Breen

Operations


Disclosures

For purposes of compliance with the GIPS standards, the firm (“Westwood” or the “Firm”) is defined as the assets of Westwood Management Corp. and Westwood International Advisors Inc.  Westwood Management Corp. is an SEC registered investment adviser under the Investment Advisers Act of 1940 that provides investment supervisory services, managing equity and fixed income portfolios.  Westwood International Advisors Inc. is a registered portfolio manager with the Ontario Securities Commission and the Autorité des marchés financiers in Quebec that provides investment supervisory services for global and emerging markets equity portfolios.  Westwood Management Corp. and Westwood International Advisors Inc. are wholly owned subsidiaries of Westwood Holdings Group, Inc. (NYSE: WHG). Policies for valuing portfolios, calculating performance, and preparing compliant presentations are available upon request, as is a complete list and description of the Firm’s composites, by contacting performance@westwoodgroup.com.

 

Westwood Management Corp. claims compliance with the Global Investment Performance Standards (GIPS®).  Unless otherwise stated, performance shown is in U.S. Dollars.

 

The Market Neutral Income Composite, previously known as the Absolute Return Global Convertibles Composite, includes all taxable and tax-exempt, fee-paying fully discretionary accounts which pursue an absolute return strategy. The strategy aims to achieve a positive return by taking long and short positions while focusing on shorter-dated, higher-quality global convertible securities and the securities which they can be exchanged into. The investment strategy aims to generate returns by identifying convertible bonds that offer a discount to their implied value, have an attractive yield, offer high liquidity and are large in issue size. Leverage is used in the portfolio through the use of derivatives up to two times the net asset value (NAV). The portfolio team may use the following derivatives to achieve the investment objective: futures, options, swaps, forwards, contracts to differences (CFD), total return swaps (TRS) and credit and interest rate derivatives. The primary hedging technique employed is Delta hedging, which is focused on the exposure to the underlying equity and volatility risk. Delta hedging aims to reduce the risk associated with price movements in the underlying security with offsetting long and short positions. The performance data for the period from January 1, 2010 to September 30, 2014 reflects the performance of an open-ended investment company managed by the portfolio team members while at a prior employer. During that period, the portfolio team members primarily responsible for the Market Neutral Income strategy were primarily responsible for the management of the open-ended investment company. This net of fees performance history is derived by compounding the monthly returns as reported by Bloomberg. Portfolio returns reflect the reinvestment of dividend and interest income. The Market Neutral Income Composite is benchmarked against the 1-Month LIBOR. LIBOR stands for “London Inter-Bank Offered Rate.” It is the interest rate at which banks can borrow funds from other banks in the London inter-bank market. The LIBOR is fixed on a daily basis by the British Bankers’ Association and is derived from a filtered average of the world’s most creditworthy banks’ interbank deposit rates for larger loans with maturities between overnight and one full year.