High Income Strategy

For more than a decade, Bradley, Foster & Sargent has managed money for clients who seek a high level of income from their portfolios. In some cases, clients need robust distributions from their portfolios for living expenses or for retirement purposes. In other cases, clients look to Bradley, Foster & Sargent to pursue a strategy which maximizes income rather than price appreciation. Since the advent of the secular bear market in 2000, this investment approach has produced especially strong total returns relative to appropriate bench marks. Our client assets in this discipline have grown in excess of $22 million, as of March 31, 2017.

Our High Income Strategy is to invest in high quality, taxable and tax-exempt bonds (and bond funds using this approach) with modest duration, together with Master Limited Partnerships (MLPs), Real Estate Investment Trusts (REITs), and other equities with above average dividend yields. This bar bell investment strategy seeks to minimize credit risk for the bonds in the portfolio while tolerating modest levels of equity risk in the equity portion of the portfolio. More recently, we have been using international bond funds to invest in securities whose currency is appreciating against the U.S. dollar. In the current environment, portfolio yields from income and dividends can exceed 5% before investment management fees.

Portfolios in our High Income Strategy are built from the bottom-up by portfolio managers using an Investment Committee-managed Guidance List to select the MLPs, REITs and other equities. Individual bonds and bond funds also need the approval of our Investment Committee before inclusion in client portfolios. Generally, the MLPs and REITs which are utilized in client portfolios have a history of maintaining or increasing distributions and dividends over the previous five years or longer.