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Newgate’s Total Return Income Portfolio Powers to a Five Year 17.3% Annualized Return

Newgate Capital Management’s Total Return Income Portfolio gained 5.3% in 2013, well ahead of the 2% loss for the Barclays US Aggregate Bond Index and rose an annualized 17.3% versus 4.4% for the Index for trailing five years. Top-down active asset allocation decisions have been the driving force behind the Portfolio’s success. Newgate’s CIO, Avy Hirshman, believes that unconstrained, active asset allocation is a prudent approach to fixed income investments during these uncertain times. “Given the current macroeconomic backdrop, Treasuries, Agencies, and investment grade corporate bonds will face headwinds,” says Hirshman. “Stronger US and global growth, the Fed’s ongoing tapering of bond purchases and the early signs of inflation will continue to push yields higher in 2014.” Capital losses in standard fixed income portfolios could be very high, particularly in terms of duration risk, resulting in a high probability of negative returns.

The Portfolio’s dynamic approach enables it to adapt to rapidly changing market conditions and to proactively manage risks, including duration risk. Over the past year, “It was more important where you weren’t invested than where you were,” says Hirshman. “And going forward, we see much of the same.” Newgate’s unconstrained Total Return Income Portfolio ended 2013 with 19% in cash and zero allocated to interest rate sensitive, Treasuries, Agencies or investment grade corporate bonds.

Newgate’s largest current allocations are to the senior floating rate loan market through discounted closed-end funds such as the Invesco Senior Income Trust (NYSE: VVR), Nuveen Floating Rate Income Fund (NYSE: JFR), Eaton Vance Senior Income Trust (NYSE: EVF) and the Nuveen Senior Income Fund (NYSE: NSL) and through large liquid ETFs such as Power Shares Senior Loan Portfolio (NYSE: BKLN).

“The key advantage of the Total Return Income Portfolio is its unconstrained investment approach,” says Newgate Founder, Dr. Sonia Rosenbaum. Rather than managing the Portfolio against a single traditional fixed income benchmark, capital is tactically allocated 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, asset selection is critical, and the Portfolio’s mandate provides investors with an actively managed approach to capitalize on current opportunities. “When we launched this Portfolio back in 1988,” says Rosenbaum, “there were few ways to lower overall duration except for going to cash. Today, we have many, including floating rate loans, convertible bonds and short term credits.”

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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