Newgate Capital Management’s Total Return Income Portfolio Continues to Shine in 2014

Business Wire


After significantly outperforming the Barclays US Aggregate Bond Index last year, Newgate’s Total Return Income Portfolio continues to outperform.

The Portfolio gained 6.3% through May 2014, well ahead of the 3.9% gain in the Index and the 2.2% average return for the Morningstar Non-Traditional Bond Fund Category. Over the trailing five years, the Portfolio rose an annualized 13.4% versus just 5% for the Index. At the end of the first quarter, Pensions & Investments once again ranked Newgate in the top 10 worldwide for global income for both the one and five year categories. Newgate’s current yield of over 7%, remains one of the largest among its peers.

For more than two decades, the Newgate Total Return Income Portfolio has been managed by industry veterans Dr. Sonia Rosenbaum, Avy Hirshman and JT Trainor. Very few investment funds have had consistent investment management for over a decade.

“Dr. Rosenbaum’s pioneering research on the quantitative behavior of closed-end fixed income funds in the mid-80s still powers Newgate’s investment process today,” says Senior Portfolio Manager, JT Trainor. Nearly one out of every five stocks on the New York Stock Exchange is a closed-end fund, and many of these funds are currently trading at substantial discounts from their net asset values.

“When you can tactically purchase high quality fixed income assets at 85 to 90 cents on the dollar in sectors that strategically make sense in today’s complex bond market, then you have basically changed the rules of investing,” says Trainor. “It’s the modern day version of the free lunch on Wall Street.”

The key advantage of the Total Return Income Portfolio is its unconstrained investment approach. Rather than passively managing the Portfolio against a traditional fixed income benchmark, capital is allocated strategically to the most attractive sectors worldwide, including Treasuries, Agencies, investment grade corporate bonds, high yield, convertible bonds, preferred shares, bank loans, mortgages, international bonds and emerging market debt. In today’s volatile market, tactical asset selection is critical, and the Portfolio’s mandate provides investors with an actively managed approach, allowing Newgate to capitalize on current opportunities.

Top-down asset allocation decisions continue to be the driving force behind the Portfolio’s success. Newgate’s CIO, Avy Hirshman, believes that unconstrained, active allocation is the most prudent approach to fixed income investments during these uncertain times. “Never in my 21 years of managing fixed income assets here at Newgate have I been so clear on the direction of interest rates over the medium term,” says Hirshman. “The Federal Reserve will continue to taper its bond purchases and eventually begin to raise its policy rates.” That’s game, set, match for traditional bond portfolios. Newgate ended May with 10% in cash and zero allocated to interest rate sensitive Treasuries, Agencies or investment grade corporate bonds. The average weighted duration of the Portfolio is now below 2 years. The largest current allocation is to the senior loan market through discounted closed-end funds such as the Invesco Senior Income Trust (VVR), Nuveen Floating Rate Income Fund (JFR), Voya Prime Rate Trust (PPR) and the Nuveen Senior Income Fund (NSL). Newgate continues to diversify internationally through funds such as the Templeton Global Income Fund (GIM) and the Powershares Emerging Markets Sovereign Debt Portfolio (PCY).

About Newgate: Newgate Capital Management LLC is an independent investment advisor based in Greenwich, Connecticut that offers an unconstrained, fixed income portfolio. Market commentary and performance are available at the company’s website:

Disclosure: Past performance is no guarantee of future results. Performance may vary across accounts. Returns are calculated using a time-weighted market value assuming reinvestment of dividends. Performance is reported net of management fees, commissions, and other direct expenses, but before custody charges, withholding taxes, and other indirect expenses. Performance shown is compared to the Barclays Capital US Aggregate Bond Index, a broad-based securities index that is unmanaged and not subject to fees and expenses. Investments cannot be made directly in a broad-based securities index. Any securities, sectors and markets listed are included for illustrative purposes at the time of publication and may not be held by accounts currently managed by Newgate. The securities identified do not represent all of the securities held in client accounts. It should not be assumed that any investments identified were or will be profitable.

Newgate Capital Management LLC
Allegra Rehder, 203-661-3757

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