US Treasury Market
Date	1 mo	3 mo	6 mo	1 yr	2 yr	3 yr	5 yr	7 yr	10 yr	20 yr	30 yr
11/12/19	1.56	1.59	1.59	1.58	1.66	1.69	1.73	1.84	1.92	2.24	2.39
11/13/19	1.56	1.57	1.59	1.57	1.63	1.65	1.69	1.79	1.88	2.20	2.36
11/14/19	1.59	1.57	1.58	1.55	1.58	1.59	1.63	1.73	1.82	2.15	2.31
11/15/19	1.59	1.57	1.59	1.54	1.61	1.61	1.65	1.75	1.84	2.16	2.31
11/18/19	1.59	1.57	1.58	1.54	1.60	1.59	1.63	1.73	1.81	2.14	2.30

                                                                                                                                                   Source: U.S. Department of the Treasury, as of 11/18/2019

---

                            Asset Allocation: Maintain the “long-end” of the Investment Portfolio

   
It is sometimes difficult to fight the feeling that it is the wrong time to purchase securities.  At times, almost everyone thinks they can call the market.  It’s not uncommon to think, the market is getting cheaper (prices lower, rates rising) so I’ll wait a bit and get a higher yield later.  This resembles greed.  Conversely, as the market trades stronger (prices higher, yields lower) investors may reflect, I don’t want to buy now because anything I purchase at this late stage will be held at a loss when the market retreats.  This resembles fear.  Fear and Greed are natural instincts that get in the way of successful investing.

Successfully managing these instincts requires a clear and disciplined strategy.  Dollar Cost Averaging (DCA) is a time tested strategy which has been proven reliable in portfolio building.  Legendary basketball coach, John Wooden, might describe DCA as “plan your work and work your plan.”  Investors use this approach to set and achieve specific goals by routinely executing on the objective regardless of market conditions.  For instance, a ten year treasury purchased this time last year would have yielded 3.20% (when investors felt fear).  The ten year purchased in Oct 2019 would have yielded 1.60% (when investors felt greed).  The two positions produce an average yield of 2.40% which is roughly 60bps higher than the current 10yr YTM.  This is a simple but effective illustration of DCA.  Resist fear and greed to accomplish long term successful portfolio performance.

To this end, please consider the security below.  It is a 15 year Agency MBS (Pool FR ZS7735), with a 2.0% coupon; a base case yield of 2.04% and duration of 4.1 years at the current speed, priced at a discount 99.719 (Subject to change).  The offering sheet below includes the details needed to thoroughly vet the security.   Please note the 38 WALA (wtd avg loan age) which demonstrates 3yrs of seasoning has morphed this bond into a class which compares closer to a new issue 10yr MBS.  Settlement is T+3.  Call if you questions or comments.  







This information is intended for institutional investors only. The material provided in this document/presentation is for informational purposes only and is intended solely for private use. Past performance is not indicative of future results. This material is not intended as an offer or solicitation for the purchase or sale of any financial instruments.

•Not FDIC Insured •No Bank Guarantee •May Lose Value