BBH Limited Duration Fund (“The Fund”) objective is to provide maximum total return, consistent with preservation of capital and prudent investment management. The Fund aims to preserve capital and to generate a positive absolute return, while attempting to avoid instances of negative total return over extended periods of time (typically, over rolling 6-month time periods). The Fund typically owns 75 to 200 Credits with most positions accounting for 0.5% to 1.5% of the Fund’s market value. Our highest conviction holdings may be up to 3.0% of the Fund’s value at purchase.
The Fund’s seeks to achieve its investment objective by investing in a well-diversified portfolio of durable, performing fixed income instruments. These investments will be primarily focused in asset-backed securities, notes and bonds issued by domestic and foreign corporations and financial institutions and U.S. Government, government agencies and government guaranteed issuers. The Fund may also purchase Mortgage Backed Securities, and Sovereign Debt when the Investment Adviser believes that the additional income from these securities justifies a higher risk of allocations to these asset classes. The Fund may invest in money market instruments, Repurchase Agreements and derivative instruments to meet its investment objective.
Our unique valuation framework and comprehensive credit review criteria are combined to build portfolios of durable credits purchased when we believe they are at attractive yields. Credit valuations often become disconnected from their underlying fundamentals and are prone to unjustifiably high levels of volatility, an inefficiency that provides the opportunity to enhance fixed income returns through active management. Our disciplined, value-based investment process seeks to:
- Preserve capital through independent research
- Invest in credit only when a Margin of Safety exists
- Drive portfolio construction with value opportunities
- Take a long-term approach
- Foster a culture of transparency, process discipline, and open debate among professionals
Investors in the Fund should be able to withstand short-term fluctuations in the fixed income markets in return for potentially higher returns over the long term. The value of portfolios changes every day and can be affected by changes in interest rates, general market conditions and other political, social and economic developments.
Investing in the bond market is subject to certain risks including market, interest-rate, issuer, credit, maturity, call and inflation risk; investments may be worth more or less than the original cost when redeemed.
Bond prices are sensitive to changes in interest rates and a rise in interest rates can cause a decline in their prices.
Asset-Backed Securities ("ABS") are subject to risks due to defaults by the borrowers; failure of the issuer or servicer to perform; the variability in cash flows due to amortization or acceleration features; changes in interest rates which may influence the prepayments of the underlying securities; misrepresentation of asset quality, value or inadequate controls over disbursements and receipts; and the ABS being structured in ways that give certain investors less credit risk protection than others.
The fund also invests in derivative instruments, investments whose values depend on the performance of the underlying security, assets, interest rate, index or currency and entail potentially higher volatility and risk of loss compared to traditional stock or bond investments. Foreign investing involves special risks including currency risk, increased volatility, political risks, and differences in auditing and other financial standards.
Illiquid investments subject the Fund to the risk that it may not be able to sell the investments when desired or at favorable prices.
Asset allocation decisions, particularly large redemptions, made by BBH&Co., whose discretionary investment advisory clients make up a large percentage of the Fund's shareholders, may adversely impact remaining Fund shareholders.