Romano Brothers & Co. Wealth Management » Fixed Income Products and Services

Douglas Geisser, Vice President

OUR FIXED INCOME PRODUCTS AND SERVICES

Romano Wealth Management is an active participant in all sectors of the U.S. bond market.  This includes municipal, corporate, government agency, treasury and mortgage bonds.  We also participate in the primary and secondary markets for fixed and variable rate FDIC Insured Certificates of Deposit.

  • We create fixed income portfolios for our clients based upon their income needs and risk parameters using individual issues versus bond mutual funds.
  • We ladder the maturities in the portfolios so frequent reinvestments can be made at market rates.  This strategy tends to average out the effects of interest rate risk over the long term.
  • We prefer to hold bonds to their maturities.  By doing so we know what the return on the investment will be when we purchase it and can generally disregard fluctuations in value based upon changes in interest rates.
  • Portfolios are structured with minimal principal risk by using investment grade issues.  When appropriate we might also consider investments in Preferred Stocks, REITS and Structured Investment Products for additional income potential.

 

OUR FIXED INCOME DIFFERENCE

We have a successful track record in identifying opportunities in the bond markets that will benefit our clients.  Whether that is buying a taxable municipal over a corporate, a callable versus non-callable bond or pinpointing certain sectors of the yield curve where higher returns can be had for minimal risk.

  • We do our own fixed income research, and are part of the national network of municipal bond dealers, where we actively bid, buy and maintain an inventory for client use.  Since there is no intermediary, we can purchase bonds and often offer them at higher yields to our clients.
  • We like to exploit the inefficiencies that are prevalent in the over the counter secondary bond market.  One such strategy involves concentrating on the odd lot sector ($25,000 to $250,000 face value bonds) since this is the typical size purchased in most of our portfolios.  This part of the secondary market is less competitively bid thus offering the ability to purchase bonds at lower prices and higher yields.  Our strategy has been extremely successful in producing 0.25%-1.00% additional annual returns in portfolios.  Larger firms and trust departments typically buy round lot blocks of $1 million or more and then allocate smaller quantities to the customer portfolios.  This results in the customer receiving an odd lot piece at a higher institutional block price and lower return.
  • We engage in extensive credit research in the municipal sector allowing us to identify investment grade issuers even though they may no longer have a published rating.  We are not deterred by the lack of a published rating which may be due to the small size of the original issue or the issuer paying a AAA rated bond insurer to insure its debt only to see the insurance company’s rating downgraded due to the recent credit crisis.  The higher yields received on these types of bonds more than offset their limited marketability.