Our bond management process is intended to provide more cash flow and more stable market value than is typical with stock portfolios.  The management process focuses on the two criteria with the most impact on these characteristics - quality and maturity.

 

 

We buy only high quality, investment grade, short and intermediate-term bonds. Our portfolios may include corporate bonds, Treasury securities, and government agency bonds. We also buy municipal bonds for taxable portfolios when returns will be higher than can be achieved with after tax returns from high grade, taxable bonds. We diversify our bond portfolios by issuer to further limit risk.

 

 

Waycross ladders bonds by maturity date. We buy bonds maturing in successive years, starting in year one and usually going out ten to twelve years. The advantages of this strategy are:

 

 

Hisorically, there is only a small return differential between high quality bonds with a ten year maturity and those with a thirty year maturity. Since prices for thirty year bonds fluctuate far more widely than ten year bonds, we believe intermediate-term bonds give our portfolios more stability.

 

 

While nothing would indicate that the historical characteristics of high quality intermediate-term bonds will change, the future cannot be guaranteed.