Among their observations on the Fund’s focus and policies:
- “We think maintaining a short spread duration is the key to managing risk in this space. The way we manage that is by focusing on cash flow. I just don’t think a lot of investors in the ultra-short space pay enough attention to spread duration. They’re so focused on the interest rate risk component that they’re not always as aware of what can happen when spreads widen significantly.”
- “The larger firms ... tend to disregard these [asset-backed security (ABS)] sectors because the markets are just too small to move the needle. Conversely, smaller firms can’t play effectively in these spaces because they don’t have the right resources or expertise. So we think at our level of assets under management, Fort Washington is ‘right-sized’ to play effectively in these esoteric ABS sectors. Touchstone Ultra Short Duration Fixed Income Fund benefits from that.”
- “The majority of Touchstone Ultra Short Duration Fixed Income Fund’s investors, we’ve found, are simply looking for a modest risk premium over cash. They want a volatility profile consistent with a true ultra-short duration strategy. They value a fund that is going to perform with relatively low volatility, not the low volatility of a money market fund necessarily, but lower volatility in exchange for a modest pickup in yield over money market funds.”
- “We don’t think it’s the right environment to reach for yield. We fight for every basis point we can, and we take a critical eye to every security that we invest in.”
- “We’ve been in a pretty low volatility period for some time now, which has helped mask the downside risk of some peers. But going forward, at some point we’re bound to have a more volatile environment and these risks will be exposed. We think that Touchstone Ultra Short Duration Fixed Income Fund has one of the best profiles out there, when you consider both the return profile and the volatility or down-side risk profile.”
This article is for informational purposes only and should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation to buy, sell or hold any security. There is no guarantee that the information is complete or timely. Past performance is no guarantee of future results. Investing in an index is not possible. Investing involves risk, including the possible loss of principal and fluctuation of value. Please visit touchstoneinvestments.com for performance information current to the most recent month-end.
A Word About Risk
The Fund invests in fixed-income securities which can lose their value as interest rates rise and are subject to credit risk which is the risk of deterioration in the financial condition of an issuer and/or general economic conditions that can cause the issuer to not make timely payments of principal and interest also causing the securities to decline in value and an investor can lose principal. When interest rates rise, the price of debt securities generally falls. Longer term securities are generally more volatile. The Fund invests in investment grade debt securities which may be downgraded by a Nationally Recognized Statistical Rating Organization (NRSRO) to below investment grade status. The Fund invests in U.S. government agency securities which are neither issued nor guaranteed by the U.S. Treasury and are not guaranteed against Price movements due to changing interest rates. The Fund invests in mortgage-backed securities and asset-backed securities which are subject to the risks of prepayment, defaults, changing interest rates and at times, the financial condition of the issuer. The Fund invests in foreign securities which carry the associated risks of economic and political instability, market liquidity, currency volatility and accounting standards that differ from those of U.S. markets and may offer less protection to investors. The Fund invests in repurchase agreements which are considered loans by the Fund and may suffer a loss of principal and interest in the event of counterparty defaults. The Fund invests in municipal securities which may be affected by uncertainties in the municipal market related to legislation or litigation involving the taxation of municipal securities or the rights of municipal security holders in the event of bankruptcy and may not be able to meet their obligations. The Fund may experience higher portfolio turnover which may lead to increased fund expenses, lower investment returns and higher short-term capital gains taxable to shareholders. Current and future portfolio holdings are subject to risk. The Advisor engages a sub-advisor to make investment decisions for the Fund’s portfolio; it may be unable to identify and retain a sub-advisor who achieves superior investment returns relative to other similar sub-advisors.
Not FDIC Insured | No Bank Guarantee | May Lose Value