BBH Limited Duration Fund

Overview

BBH Limited Duration Fund (“The Fund”) seeks to invest in a well-diversified portfolio of high quality fixed income instruments 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 Credits Obligations such as bonds, notes, loans, leases and other forms of indebtedness, except for Cash and Cash Equivalents, issued by obligors other than the U.S. Government and its agencies, totaled at the level of the ultimate obligor or guarantor of the Obligation. See more definitions 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 investments are primarily focused in notes and bonds issued by domestic and foreign corporations and financial institutions and U.S. Government, Government agency and Government guaranteed issuers. The Fund may also purchase Asset Backed Securities Asset Backed Securities A financial security backed by a loan, lease or receivables. See more definitions , Mortgage Backed Securities Mortgage Backed Securities A type of asset-backed security that is secured by a mortgage or collection of mortgages. See more definitions , and other Sovereign Debt Sovereign Debt Bonds issued by a foreign country in that country's currency to finance to country's growth. See more definitions  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 Repurchase Agreements A type of short-term borrowing for dealers in government securities. The dealer sells the government security to investors, usually on an overnight basis, and buys them back the following day. See more definitions  and derivative instruments to meet its investment objective although not typically as a primary strategy.

Approach

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 Margin of Safety With respect to fixed income investments, a margin of safety exists when the additional yield offers, in BBH's view, compensation for the potential credit, liquidity and inherent price volatility of that type of security and it is therefore more likely to outperform an equivalent maturity credit risk-free instrument over a 3-5 year horizon. See more definitions exists
  • Drive portfolio construction with value opportunities
  • Take a long-term approach
  • Foster a culture of transparency, process discipline, and open debate among professionals

Bond prices are sensitive to changes in interest rates and a rise in interest rates can cause a decline in their prices.

The value of some asset-backed securities and mortgage-backed securities may be particularly sensitive to changes in prevailing interest rates. Although mortgage-backed securities are generally supported by some form of government or private insurance, there is no assurance that private guarantors or insurers will meet their obligations. 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.