Turner Investment Partners is looking to add some 10% to its corporate allocation in its intermediate and core products to take advantage of attractive yields in the asset class. Roger Early, who oversees $750 million in taxable fixed-income assets, says it will take at least until the end of the quarter before the allocation shift is complete. He declined to specify the exact dollar amount of the trade, but says it will be less than $75 million, as many of the short-duration products carry little or no corporate exposure. The firm will finance the trade by selling Treasuries and agency debentures, which Early says have benefited from the flight to quality and are overvalued relative to other asset classes.
Turner will look to add to its healthcare position, as the sector has suffered from negative news over the last six months, causing spreads to widen. The firm has identified two investment-grade companies it likes. Early declines to name the companies. He also likes industrial names such as auto parts, though he says the firm has yet to identify specific companies in which it will invest.
Recent names to which Turner has added include a pair of brokers: Morgan Stanley and Lehman Brothers. The Lehman 6% notes of '12 were trading at 276 basis points over 10-year Treasuries last Monday, while Morgan Stanley's 6.6% notes of '12 were trading at 159 basis points over the curve. Early says he believes these names will recover once the stock market picks up. The firm has also purchased bonds of General Motors, on the view that the auto-sector sell-off is overdone. The GMAC 7% notes of '12 were trading at 303 basis points over Treasuries last Monday.
The Berwyn, Penn. shop invests 50-55% in mortgages-backed securities, 10% in agency debentures, 5-10% in TIPS, 5% in corporates and the rest in Treasuries. Its duration is 90% of its bogey, the 4.1-year Lehman Brothers aggregate.
