High level of income consistent with prudent investment management and the preservation of capital.
The Fund seeks to achieve its investment objective by investing at least 80% of its net assets under normal circumstances in U.S. Government securities. The Fund’s investments may also include mortgage-backed securities and repurchase agreements secured by U.S. Government securities. The Fund normally has a weighted average maturity of not more than three years. U.S. Government securities are securities that are issued or guaranteed as to principal and interest by the U.S. Government or one of its agencies or instrumentalities. Some U.S. Government securities are backed by the full faith and credit of the U.S. Government, such as U.S. Treasury bills and notes and obligations of the Government National Mortgage Association (Ginnie Mae). Other U.S. Government securities are backed by the issuer’s right to borrow from the U.S. Treasury, such as Federal National Mortgage Association (Fannie Mae) securities, while some are backed only by the credit of the issuing organization, such as obligations of the Federal Home Loan Mortgage Corporation (Freddie Mac).
The Fund invests in securities issued or secured by the:
- U.S. Treasury
- Government National Mortgage Association (Ginnie Mae)
- Federal National Mortgage Association (Fannie Mae)
- Federal Home Loan Mortgage Corporation (Freddie Mac)
- Other U.S. Government agencies and instrumentalities
The portfolio manager seeks to identify debt securities with characteristics such as:
- Attractive yields and prices
- The potential for capital appreciation
- Reasonable credit quality
The Fund also may invest to a lesser extent in a variety of debt securities, including corporate bonds, privately issued mortgage-backed securities, asset-backed securities and foreign securities. The portfolio managers may use various investment techniques (which may involve the use of derivative instruments such as interest rate, currency, index and credit default swaps) to adjust the Fund’s investment exposure, but there is no guarantee that these techniques will work.
Emphasize a fundamental, bottom-up research process to identify relative value opportunities and enhance total return, while limiting volatility. Add value primarily through actively managing sector and security selection while controlling portfolio duration to within +/- 15% of the benchmark.
GEAM utilizes a disciplined team approach to actively manage duration, sector allocation and security selection within a risk-controlled environment. Although all fixed income decisions incorporate interest rate expectations, in our view, duration management is not a primary source of returns in the short-term duration strategy. The main drivers of performance are expected to be sector allocation and security selection. Sector portfolio managers provide a rigorous analysis of both fundamental and technical drivers of sector performance. Using this analysis against our current macro-economic view, the team collectively decides to over or underweight a sector versus the benchmark. Security selection within each sector is the responsibility of each sector portfolio manager. Individual securities are selected for investment by a relative value process, which incorporates current market valuations provided by GEAM traders and in-depth fundamental research provided by GEAM's fixed income research team. Investment decisions are viewed in a three to six month horizon.
1The investment process is fluid and may change from time to time without prior public notice as market conditions and portfolio managers change.
