Atlanta Capital High Quality Intermediate

Overview
Investment Approach

Overview

Strategy Facts

Capability:

Fixed Income

Strategy Facts

Capability:

Fixed Income

Summary

The High Quality Intermediate strategy takes a risk-controlled approach that seeks to add value through security selection, sector emphasis and yield curve management. We emphasize high quality securitized bonds due to their attractive yields and low correlation to risk assets, which help stabilize returns in a diversified portfolio.

Investment Approach

Philosophy

We invest in high quality securitized bonds with stable and predictable cash flows and low credit and event risk. These types of securities can produce consistent returns and preserve capital during times of capital market uncertainty. We seek to provide liquidity in all markets and deliver a consistent return profile with a low correlation to risk assets, helping offset risk in a diversified portfolio.

Differentiators

Security Selection

We specialize in high quality securitized investing, including traditional, low volatility ABS and Agency MBS backed by single- and multi-family loans. Our approach focuses on identifying securitized bonds with stable and predictable cash flows and low credit and event risk.

Sector Emphasis

We deemphasize corporate bonds. Instead, we emphasize high quality securitized bonds because they office similar yields to corporate bonds with lower correlations to risk assets.

Results of Our Process

We seek to provide liquidity in all markets and deliver a consistent return profile with a low correlation to risk assets, helping offset risk in a diversified portfolio.

Investment Process

1	Our Strategy:
	Focus on issue selection & yield curve management Exploit inefficiencies in asset- and mortgage-backed securities Systematically underweight corporate bonds
2	Our Objective:
	To serve as a ‘hedge’ to falling equity and other risk asset prices To help cushion against market volatility Seek to provide liquidity in all market conditions

RISK CONSIDERATIONS

Investing involves risk, including possible loss of principal. The value of investments may increase or decrease in response to economic and financial events (whether real, expected or perceived) in the U.S. and global markets. developments. Investments rated below Investment Grade (typically referred to as “junk”) are generally subject to greater price volatility and illiquidity than higher rated investments. Credit Risk: Investments in income securities may be affected by changes in the creditworthiness of the issuer and are subject to the risk of non-payment of principal and interest. The value of income securities also may decline because of real or perceived concerns about the issuer’s ability to make principal and interest payments. Duration Risk: Securities with longer durations tend to be more sensitive to interest rate changes than securities with shorter durations. Government Agency Risk: While certain U.S. Government sponsored agencies may be chartered or sponsored by acts of Congress, their securities are neither issued nor guaranteed by the U.S. Treasury. Income Market Risk: An imbalance in supply and demand in the income market may result in valuation uncertainties and greater volatility, less liquidity, widening credit spreads and a lack of price transparency in the market. Interest Rate Risk: As interest rates rise, the value of certain income investments is likely to decline. Maturity Risk: Longer-term bonds typically are more sensitive to interest rate changes than shorter-term bonds. Prepayment Risk: Mortgage-backed securities are subject to prepayment risk.

There is no guarantee that any investment strategy will work under all market conditions, and each investor should evaluate their ability to invest for the long-term, especially during periods of downturn in the market.

A separately managed account may not be appropriate for all investors. Separate accounts managed according to the Strategy include a number of securities and will not necessarily track the performance of any index. Please consider the investment objectives, risks and fees of the Strategy carefully before investing. A minimum asset level is required.

For important information about the investment managers, please refer to Form ADV Part 2.

The views and opinions and/or analysis expressed are those of the author or the investment team as of the date of preparation of this material and are subject to change at any time without notice due to market or economic conditions and may not necessarily come to pass. Furthermore, the views will not be updated or otherwise revised to reflect information that subsequently becomes available or circumstances existing, or changes occurring, after the date of publication. The views expressed do not reflect the opinions of all investment personnel at Morgan Stanley Investment Management (MSIM) and its subsidiaries and affiliates (collectively “the Firm”), and may not be reflected in all the strategies and products that the Firm offers.

OTHER CONSIDERATIONS

The indexes are unmanaged and do not include any expenses, fees or sales charges. It is not possible to invest directly in an index. Any index referred to herein is the intellectual property (including registered trademarks) of the applicable licensor. Any product based on an index is in no way sponsored, endorsed, sold or promoted by the applicable licensor and it shall not have any liability with respect thereto.

The Bloomberg High Quality Intermediate Aggregate Index is a market-value weighted index that represents securities that are U.S. domestic, taxable and dollar-denominated. The index covers the U.S. investment grade fixed rate bond market rated A3 or better by Moody’s Investors Service, with index components for government and corporate securities, mortgage pass-through securities and asset-backed securities. Bonds must have a maturity from one up to (but not including) ten years.

The information presented represents how the portfolio management team generally implements its investment process under normal market conditions.

Atlanta Capital is part of Morgan Stanley Investment Management. Morgan Stanley Investment Management is the asset management division of Morgan Stanley.