Philosophy & Process Reams seeks to consistently outperform the broad Lehman U.S. TIPS Index and deliver outstanding client service. We attempt to preserve purchasing power by using inflation-protected securities while providing diversification benefits through the use of this unique asset class. We utilize a core portfolio of U.S. TIPS, but opportunistically augment real returns with other inflation-linked securities and bond alternatives. The investment process combines duration and yield-curve management with bottom-up issue selection focusing on inflation-adjusted Treasury bonds as well as other inflation-linked opportunities and undervalued sectors of the bond market. Our duration decision is based on the forecast of future inflation used to determine "real" interest rates. This forecast is derived from an analysis of long-term money supply growth. Yield-curve exposure is determined by comparing the current difference between short and long Treasury bonds and TIPS to historical norms and gradually increasing the bulleted or barbelled configuration as the yield-curve spread moves below or above normal levels. Bottom-up issue selection is based on the individual scenario analysis performed by our portfolio management team on each bond that survives our fundamental evaluation process. The scenario analysis process helps us identify which bonds should perform the best under the most likely interest-rate scenarios. Importantly, this process will also point out those bonds that, while attractive on the surface, are more vulnerable to risks in the bond market. Given the outcome of the analysis, the portfolio managers compare investment opportunities and the portfolio is assembled from the best values. The key component of our investment process, as well as our primary risk management tool, is the scenario analysis approach. In this approach, any investment is considered by examining possible outcomes of the investment and rejecting those with unacceptable possible downside exposure. Both interest rate and credit scenarios are considered. We attempt to probability-weight the possible scenarios of an investment in order to further rank its attractiveness and suitability. | Company Profile | Investment Professionals | Fixed Income Products | Quarterly Review |  | Client Account Access | Contact Information | Home | © Reams Asset Management Company. Terms of Use/Legal Issues