Investment Options

Our Specialization

Fixed Income Strategies

Taxable Bond

McDonnell’s taxable bond strategy is intended to outperform the market benchmark in a consistent, lower risk manner where capital preservation is a key objective.  To achieve this objective, McDonnell limits dependence on forecasting interest rates, seeking to control the risk-return profile of the portfolio relative to the predetermined benchmark by maintaining a relatively duration neutral posture.

ALPHA LEVERS

Core Aggregate

TARGET OBJECTIVES:
Core Bond, Total Return, Diversified Portfolio with Moderate Interest Rate Risk
Target Maturity: 6 – 10 YRS.
Target Duration: 5 – 7 YRS.
Average Credit Quality: A OR ABOVE
SECTORS:
US Government, US Agency, Investment Grade Corporates, Asset-Backed, Mortgage-Backed, Commercial Mortgage-Backed, Taxable Municipals
BENCHMARKS:
Bloomberg Barclays U.S. Aggregate
FTSE BIG
ICE Bank of America Merrill Lynch Domestic Master

 

SECTOR DISTRIBUTION   QUALITY DISTRIBUTION
TREASURY 14% AAA 64%
AGENCY 12% AA 5%
MORTGAGE-BACKED 25% A 15%
ASSET-BACKED 7% BBB 16%
COMM. MORTGAGE-BACKED 3%  
CREDIT 36%
CASH 3%

The portfolio summary data provided is based on the average portfolio characteristics of the Core Aggregate Bond Composite managed by McDonnell Investment Management as of 6/30/18, given current market conditions and yields at the time. The exact characteristics and security selection of a portfolio designed to meet a client’s specific investment objectives will change and could be materially different depending on prevailing economic or market conditions at the time of implementation. The characteristics set forth do not reflect the deduction of advisory fees, transaction costs, and other expenses that a client would pay. Further they will be impacted by the reinvestment of dividends, market value changes, and/or other earnings.  Source:  BondEdge Solutions.

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Intermediate Government/Credit

TARGET OBJECTIVES:
Government and Corporate, Total Return Diversified Portfolio with Low to Moderate Interest Rate Risk
Target Maturity: 3 – 6 YRS.
Target Duration: 3 – 5 YRS.
Average Credit Quality: A OR ABOVE
SECTORS:
US Government, US Agency, Investment Grade Corporates, Taxable Municipals
BENCHMARKS:
Bloomberg Barclays Intermediate Government Credit
FTSE Intermediate Government/Corporate
ICE Bank of America Merrill Lynch Intermediate Government/Corporate

 

SECTOR DISTRIBUTION   QUALITY DISTRIBUTION
TREASURY 35% AAA 52%
AGENCY 8% AA 8%
CREDIT 50% A 19%
MORTGAGE-BACKED 1% BBB 21%
ASSET-BACKED 3%  
COMM. MORTGAGE-BACKED 1%
CASH 2%

The portfolio summary data provided is based on the average portfolio characteristics of the Intermediate Government/Credit Bond Composite managed by McDonnell Investment Management as of 6/30/18, given current market conditions and yields at the time. The exact characteristics and security selection of a portfolio designed to meet a client’s specific investment objectives will change and could be materially different depending on prevailing economic or market conditions at the time of implementation. The characteristics set forth do not reflect the deduction of advisory fees, transaction costs, and other expenses that a client would pay. Further they will be impacted by the reinvestment of dividends, market value changes, and/or other earnings.  Source:  BondEdge Solutions.

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Government/Credit

TARGET OBJECTIVES:
Government and Corporate, Total Return Diversified Portfolio with Moderate to High Interest Rate Risk
Target Maturity: 7 – 11 YRS.
Target Duration: 5.5 – 7.5 YRS.
Average Credit Quality: A OR ABOVE
SECTORS:
US Government, US Agency, Investment Grade Corporates, Taxable Municipals
BENCHMARKS:
Bloomberg Barclays Government Credit
FTSE Government/Corporate
ICE Bank of America Merrill Lynch Government/Corporate

 

SECTOR DISTRIBUTION   QUALITY DISTRIBUTION
TREASURY 24% AAA 41%
AGENCY 7% AA 9%
CREDIT 61% A 21%
MORTGAGE-BACKED 3% BBB 29%
ASSET-BACKED 2%  
CASH 3%

The portfolio summary data provided is based on the average portfolio characteristics of the Government/Credit Bond Composite managed by McDonnell Investment Management as of 6/30/18, given current market conditions and yields at the time. The exact characteristics and security selection of a portfolio designed to meet a client’s specific investment objectives will change and could be materially different depending on prevailing economic or market conditions at the time of implementation. The characteristics set forth do not reflect the deduction of advisory fees, transaction costs, and other expenses that a client would pay. Further they will be impacted by the reinvestment of dividends, market value changes, and/or other earnings.  Source:  BondEdge Solutions.

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1-3 Year Government/Credit

TARGET OBJECTIVES:
Capital Preservation Portfolio with Liquidity and Higher Yield than Money Market Funds and Lower Interest Rate Risk
Target Maturity: 1 – 3 YRS.
Target Duration: 1.5 – 2.5 YRS.
Average Credit Quality: A OR ABOVE
SECTORS:
US Government, US Agency, Investment Grade Corporates, Taxable Municipals
BENCHMARK:
ICE Bank of America Merrill Lynch Government/Corporate

 

SECTOR DISTRIBUTION   QUALITY DISTRIBUTION
TREASURY 40% AAA 60%
AGENCY 18% AA 12%
CREDIT 41% A 19%
CASH 1% BBB 9%

The portfolio summary data provided is based on the average portfolio characteristics of the 1-3 Year Government/Credit Bond Composite managed by McDonnell Investment Management as of 6/30/18, given current market conditions and yields at the time. The exact characteristics and security selection of a portfolio designed to meet a client’s specific investment objectives will change and could be materially different depending on prevailing economic or market conditions at the time of implementation. The characteristics set forth do not reflect the deduction of advisory fees, transaction costs, and other expenses that a client would pay. Further they will be impacted by the reinvestment of dividends, market value changes, and/or other earnings.  Source:  BondEdge Solutions.

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Intermediate Credit

TARGET OBJECTIVES:
Corporate Concentration, Total Return, Yield Focused, Diversified Portfolio with Low to Moderate Interest Rate Risk
Target Maturity: 3.5 – 6.5 YRS.
Target Duration: 3.5 – 5.5 YRS.
Average Credit Quality: A OR ABOVE
SECTORS:
Investment Grade Corporates, Taxable Municipals
BENCHMARK:
Bloomberg Barclays Intermediate Government Credit

 

SECTOR DISTRIBUTION   QUALITY DISTRIBUTION
INDUSTRIAL 51% AAA 12%
UTILITY 12% AA 10%
FINANCE 34% A 36%
OTHER CREDIT 2% BBB 42%
CASH 1%

The portfolio summary data provided is based on the average portfolio characteristics of the Intermediate Credit Bond Composite managed by McDonnell Investment Management as of 6/30/18, given current market conditions and yields at the time. The exact characteristics and security selection of a portfolio designed to meet a client’s specific investment objectives will change and could be materially different depending on prevailing economic or market conditions at the time of implementation. The characteristics set forth do not reflect the deduction of advisory fees, transaction costs, and other expenses that a client would pay. Further they will be impacted by the reinvestment of dividends, market value changes, and/or other earnings.  Source:  BondEdge Solutions.

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All Government

TARGET OBJECTIVES:
U.S. Government and Agency, High Quality, Total Return, Diversified Portfolio with Moderate to High Interest Rate Risk
Target Maturity: 6 – 10 YRS.
Target Duration: 5.5 – 7.5 YRS.
Average Credit Quality: AA OR ABOVE
SECTORS:
US Government, US Agency, Mortgage-Backed
BENCHMARK:
Bloomberg Barclays Government

 

SECTOR DISTRIBUTION   QUALITY DISTRIBUTION
TREASURY 55% AAA 100%
AGENCY 3%
TIPS 41%
CASH 1%

The portfolio summary data provided is based on the average portfolio characteristics of the All Government SMA Bond Composite managed by McDonnell Investment Management as of 6/30/18, given current market conditions and yields at the time. The exact characteristics and security selection of a portfolio designed to meet a client’s specific investment objectives will change and could be materially different depending on prevailing economic or market conditions at the time of implementation. The characteristics set forth do not reflect the deduction of advisory fees, transaction costs, and other expenses that a client would pay. Further they will be impacted by the reinvestment of dividends, market value changes, and/or other earnings.  Source:  BondEdge Solutions.

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Municipal Bond

McDonnell’s municipal bond strategy is intended to outperform the respective benchmark in a consistent, lower risk manner.  To achieve this objective, McDonnell limits dependence on forecasting interest rates, seeking to control the risk-return profile of the portfolio relative to the predetermined benchmark by maintaining a relatively duration neutral posture.

For investors seeking to use tax-exempt strategies, it is important to note that tax considerations represent an essential component of McDonnell’s investment decision process.  Tax implications are included in the relative value analysis conducted to evaluate investment alternatives, and loss harvesting transactions play an integral role.

ALPHA LEVERS

Short Municipal

TARGET OBJECTIVES:
Capital Preservation, Low Interest Rate Volatility
Target Maturity: 1 – 3 YRS.
Target Duration: 2.5 – 3 YRS.
Average Credit Quality: AA+ OR ABOVE
SECTORS:
Core Municipal
BENCHMARKS:
Bloomberg Barclays 3 Year Municipal
Bloomberg Barclays Short Term Government

 

LOCAL G.O. 24% AAA 38%
WATER 22% AA 50%
PRE-REFUNDED 16% A 12%
EDUCATION 15% BBB 0%
POWER 11%  
LEASE 5%
SPECIAL TAX 4%
HOSPITAL 2%
CASH 1%

The portfolio summary data provided is based on the average portfolio characteristics of the Short Municipal Bond Composite managed by McDonnell Investment Management as of 6/30/18, given current market conditions and yields at the time. The exact characteristics and security selection of a portfolio designed to meet a client’s specific investment objectives will change and could be materially different depending on prevailing economic or market conditions at the time of implementation. The characteristics set forth do not reflect the deduction of advisory fees, transaction costs, and other expenses that a client would pay. Further they will be impacted by the reinvestment of dividends, market value changes, and/or other earnings.  Source:  Investortools, Inc.

Intermediate Municipal

TARGET OBJECTIVES:
Capital Stability, Tax-Free Income, Low to Moderate Interest Rate Volatility
Target Maturity: 5 YRS.
Target Duration: 4 – 4.25 YRS.
Average Credit Quality: AA+ OR ABOVE
SECTORS:
Core Municipal
BENCHMARKS:
Bloomberg Barclays Municipal Managed Money Short Intermediate
Bloomberg Barclays 5 or 7 Year Municipal
ICE Bank of America Merrill Lynch 3 to 7 Year Municipal

 

SECTOR DISTRIBUTION   QUALITY DISTRIBUTION
LOCAL G.O. 25% AAA 26%
WATER 17% AA 55%
EDUCATION 9% A 18%
TRANSPORTATION 9% BBB 1%
SPECIAL TAX 7%  
HOSPITAL 7%
PRE-REFUNDED 6%
STATE 6%
POWER 6%
LEASE 4%
CASH 4%

The portfolio summary data provided is based on the average portfolio characteristics of the Intermediate Municipal Bond Composite managed by McDonnell Investment Management as of 6/30/18, given current market conditions and yields at the time. The exact characteristics and security selection of a portfolio designed to meet a client’s specific investment objectives will change and could be materially different depending on prevailing economic or market conditions at the time of implementation. The characteristics set forth do not reflect the deduction of advisory fees, transaction costs, and other expenses that a client would pay. Further they will be impacted by the reinvestment of dividends, market value changes, and/or other earnings.  Source:  Investortools, Inc.

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3-15 Year Municipal

TARGET OBJECTIVES:
Defined Liability, After-Tax Total Return
Target Maturity: 8 – 10 YRS.
Target Duration: 5 – 6 YRS.
Average Credit Quality: AA+ OR ABOVE
SECTORS:
Core Investment Grade Municipal, Opportunistic (<20%)
BENCHMARK:
Bloomberg Barclays 3-15 Year Municipal Blend

 

SECTOR DISTRIBUTION   QUALITY DISTRIBUTION
TRANSPORTATION 16% AAA 22%
HOSPITAL 16% AA 52%
EDUCATION 12% A 25%
LOCAL G.O. 9% BBB 1%
SPECIAL TAX 9%  
PRE-REFUNDED 9%
WATER 8%
POWER 6%
STATE 6%
LEASE 2%
CASH 3%

The portfolio summary data provided is based on the average portfolio characteristics of the 3-15 Year National Municipal Bond Composite managed by McDonnell Investment Management as of 6/30/18, given current market conditions and yields at the time. The exact characteristics and security selection of a portfolio designed to meet a client’s specific investment objectives will change and could be materially different depending on prevailing economic or market conditions at the time of implementation. The characteristics set forth do not reflect the deduction of advisory fees, transaction costs, and other expenses that a client would pay. Further they will be impacted by the reinvestment of dividends, market value changes, and/or other earnings.  Source:  Investortools, Inc.

Medium Municipal

TARGET OBJECTIVES:
High Level of Tax-Free Income, After-Tax Return, Lower Level of Price Volatility than Long-Term Bonds
Target Maturity: 10 YRS.
Target Duration: 6 – 7 YRS.
Average Credit Quality: AA+ OR ABOVE
SECTORS:
Core Municipal
BENCHMARKS:
Bloomberg Barclays Municipal Managed Money Intermediate
Bloomberg Barclays 10 Year Municipal
ICE Bank of America Merrill Lynch 7 to 12 Year Municipal

 

SECTOR DISTRIBUTION   QUALITY DISTRIBUTION
TRANSPORTATION 17% AAA 14%
LOCAL G.O. 15% AA 54%
SPECIAL TAX 14% A 31%
EDUCATION 12% BBB 1%
WATER 10%  
HOSPITAL 9%
POWER 9%
STATE 5%
PRE-REFUNDED 4%
LEASE 4%
CASH 1%

The portfolio summary data provided is based on the average portfolio characteristics of the Medium Municipal Bond Composite managed by McDonnell Investment Management as of 6/30/18, given current market conditions and yields at the time. The exact characteristics and security selection of a portfolio designed to meet a client’s specific investment objectives will change and could be materially different depending on prevailing economic or market conditions at the time of implementation. The characteristics set forth do not reflect the deduction of advisory fees, transaction costs, and other expenses that a client would pay. Further they will be impacted by the reinvestment of dividends, market value changes, and/or other earnings.  Source:  Investortools, Inc.

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Crossover

Allocation between taxable and tax-exempt bonds is based on the relative value of municipal bonds vs. all taxable sectors including Treasury, agency, corporate, asset-backed, mortgages, high yield (both municipal and taxable) and non-dollar bonds.  Consideration is given to the client’s tax situation, including marginal tax rate, AMT status and taxable income deductions as sector opportunities are evaluated on an after-tax total return basis.  Utilizing proprietary historical relative value models and forward looking after-tax return projections, a base case allocation between taxable and tax-exempt bonds is established.

Yield spreads and historical relative value are the primary indicators as to when taxable bonds present value opportunities, but are not the sole determinants of potential for excess return.  Fundamental analysis and intuitive assessments of market conditions augment spread data as the investment team makes sector allocations.

Tax Efficient Municipal Crossover

TARGET OBJECTIVES:
After-Tax Total Return, Optimize After-Tax Income Relative to Tax Considerations
Target Maturity: Various; Generally < 10 YRS.
Target Duration: Various; Generally < 7 YRS.
Average Credit Quality: AA+ OR ABOVE
SECTORS:
Core Investment Grade Municipal and Taxable
BENCHMARKS:
Bloomberg Barclays Municipal

 

SECTOR DISTRIBUTION   QUALITY DISTRIBUTION
HOSPITAL 15% AAA 22%
TRANSPORTATION 14% AA 42%
POWER 13% A 31%
PRE-REFUNDED 12% BBB 3%
LOCAL G.O. 12%  Non-Rated 2%
EDUCATION 11%
SPECIAL TAX 8%
STATE G.O. 4%
CORPORATE 3%
LEASE 3%
WATER 3%
CASH 2%

The portfolio summary data provided is based on the average portfolio characteristics of the Tax Efficient Crossover Municipal Bond Composite managed by McDonnell Investment Management as of 6/30/18, given current market conditions and yields at the time. The exact characteristics and security selection of a portfolio designed to meet a client’s specific investment objectives will change and could be materially different depending on prevailing economic or market conditions at the time of implementation. The characteristics set forth do not reflect the deduction of advisory fees, transaction costs, and other expenses that a client would pay. Further they will be impacted by the reinvestment of dividends, market value changes, and/or other earnings.  Source:  Investortools, Inc.

3-15 Year / Intermediate Aggregate

TARGET OBJECTIVES:
Actively Manage Strategic Portfolio Crossover Allocation; Higher After-Tax Total Return than Passive Strategies
Target Maturity: Various; Generally < 10 YRS.
Target Duration: Various; Generally < 7 YRS.
Average Credit Quality: AA+ OR ABOVE
SECTORS:
Core Investment Grade Municipal and Taxable
BENCHMARKS:
Custom Bloomberg Barclays Blends

 

ESG / Impact

McDonnell’s approach to ESG investing applies the firm’s fundamentally oriented, research driven investment process to construct “Impact” portfolios.  Impact factors evaluate human, social and environmental considerations which may serve as leading indicators that drive financial performance.

Tax Advantaged Impact

TARGET OBJECTIVES:
Target Maturity: 10 – 15 YRS.
Target Duration: 4 – 8 YRS.
Average Credit Quality: A OR ABOVE
Tax Advantaged Social Impact Strategy
Seeks to invest in bonds which finance projects intended to have a desirable impact on human services.
SECTORS:
Healthcare
Primary & Secondary Education
Low Income Housing
Transportation
Sustainable Local Governments
Tax Advantaged Environmental Impact Strategy
Seeks to invest in bonds which finance projects intended to have a desirable impact on human services.
SECTORS:
Water
Renewable Energy
LEED Buildings
Land Preservation
Green Bonds
Energy Efficient Mass Transit
Sustainable Local Governments

For illustrative purposes only to represent target objectives for the McDonnell Tax Advantaged Impact Strategy.  McDonnell cannot assure that the type of investments discussed herein will outperform any other investment strategy in the future, nor can it guarantee that such investments will present the best or an attractive risk-adjusted investment in the future. The exact characteristics and security selection of a portfolio designed to meet a client’s specific investment objectives will vary depending on prevailing economic or market conditions at the time of implementation.

 

Our Specialization

Insurance Asset Management

  • Leading provider of customized investment management to the institutional market
  • Insurance company clients represent approximately one third of McDonnell’s assets under management and include:
    • Life & Health
    • Property & Casualty
    • Captive & Reinsurance
    • Self-Insurers
  • Well-positioned to address unique objectives of insurance clients, offering a broad range of investment options, including but not limited to:
    • Crossover Strategies
    • Taxable – Short-Term, Intermediate and Longer Duration
    • Municipal – National and State Specific
    • Specialized Mandates

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Industry Specialization & Service Commitment

 

Monitoring of Portfolio Guidelines & Restrictions

  • Authorized Securities
  • Sector Constraints
  • Issue and Issuer-level Constraints
  • Portfolio Values versus Index/Benchmark Limitations
  • Compliance with State Regulations

Risk Management Systems

  • Portfolio Sensitivity Analysis
  • Cash Flow Projections
  • Asset Liability Matching

Investment & Accounting

  • Summary Characteristics
  • Holdings by Sector
  • Income Summary
  • Transaction Summary
  • NAIC Quality Summary
  • Schedule D Assistance
  • Online Access to Account Information
  • A.M. Best Sector Report
  • Regulation 126

Comprehensive Approach

  • Portfolio Management Team with Expertise in Complex Investment Assignments
  • Recognized Leader in Credit Research
  • Insurance Accounting Team Equipped to Produce Custom Reports
  • Experienced Internal Compliance Staff with Comprehensive Procedures to Monitor Intricate Guidelines

We work to structure investment solutions to achieve our clients’ specific goals.

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