Account Strategies

Corbyn Investment Management recognizes that each investor has unique financial goals.

We offer a full spectrum of investment objectives ranging from very conservative fixed-income accounts to those focusing on capital appreciation.

Strategic Value

The objective of this investment strategy is capital appreciation with some income generation.  To achieve this goal, equity and fixed income holdings may be in fewer, more concentrated positions compared to other Corbyn account types.  This account strategy may also experience a higher rate of turnover and we may invest a portion of the account in “event-driven” equity or fixed-income securities such as workouts and special situations.

Strategic Value Fact Sheet dated September 30, 2018

Capital Appreciation

The objective of this investment strategy is capital appreciation with some income generation.  Capital Appreciation accounts are invested primarily in equity securities, but may also include investments in fixed income securities, primarily below investment grade (high yield) corporate bonds.  The fixed income securities may be capable of providing capital appreciation, but the primary attribute is the generation of attractive fixed income streams.

Capital Appreciation Fact Sheet dated September 30, 2018

Balanced

The objective of this investment strategy is capital appreciation, with income generation an important, but secondary, goal. Balanced accounts are invested in both equity and fixed income securities, including below investment grade (high yield) corporate bonds.  The relative weighting between these security types will vary depending on available investment opportunities and market conditions.  The allocation of equity investments in the portfolio will typically be lower than that of the Capital Appreciation account strategy.

Balanced Fact Sheet dated September 30, 2018

Income Oriented

The objective of this investment strategy is current income generation, along with capital appreciation.  Income Oriented accounts are invested primarily in fixed income securities, including below investment grade (high yield) corporate bonds with either income or capital appreciation potential.  Equity investments will be included; however, they will comprise a smaller portion of the portfolio than a Balanced account strategy.

Income Oriented Fact Sheet dated September 30, 2018

 Strategic Income “Plus”

The principal objective of this investment strategy is total return, primarily resulting from current income.  To accomplish this objective, we employ a flexible strategy of investing in fixed income securities, primarily below investment grade (high yield) corporate bonds, but may also include convertible bonds and preferred stocks.  The expected duration of many securities purchased in this strategy will be longer than that of Strategic Income accounts.  Consequently, investors should expect more sensitivity to general market and interest rate moves than the Strategic Income account strategy due to the somewhat longer maturity profile.

Strategic Income “Plus” Composite dated September 30, 2018

Strategic Income

The principal objective of this investment strategy is total return, primarily resulting from current income.  To accomplish this objective, we employ a flexible strategy of investing in fixed income securities, primarily below investment grade (high yield) corporate bonds, but may also include convertible bonds and preferred stocks.  The expected duration of the fixed income securities purchased in this strategy is relatively short so the total returns are less dependent upon general market and interest rate moves.

Strategic Income Fact Sheet dated September 30, 2018

 

We provide investment advice to individuals, corporate pension and profit-sharing plans, charitable organizations, foundations, individual retirement plans, trusts, corporations and investment advisors.  We prefer that new accounts begin with a minimum balance of $500,000.

Risk of Loss

Clients should be aware that investing in securities involves the risk of loss that you should be prepared to bear, and there is no guarantee that any of the investment strategies described above will meet your objectives. We make no representation regarding the likelihood or probability that any proposed investment will in fact achieve a particular goal and you may risk the permanent loss of your original investment.  Each client must carefully consider the appropriateness of the proposed investments in light of the client’s own personal financial circumstances, including cash flow needs, unusual tax circumstances or other complex or subjective concerns.  You are urged to seek the advice of tax professionals and to use all available resources to educate yourself about investments in general, as well as the investments made by Corbyn. 

Concentration Risk: Certain investment strategies may impose more risk than others due to the type and/or concentration of securities in the portfolio.  Our various investment strategies focus more on a particular type of investment (equity or fixed income) and, therefore, may be subject to a greater risk of adverse developments.  In addition, all investment strategies may include only a small number of securities and therefore may not be diversified across all sectors or industry groups.  The value of your investment may vary considerably in response to changes in the market value of an individual security and this may result in higher volatility.

Strategy Risk:  There is no guarantee that our analysis of the value or the potential for appreciation of value for a particular security or asset class is correct.  The securities that we consider undervalued may not increase in price to what we believe is the full value but may instead, decrease in value. 

Market Risk: The equity and fixed income markets can be volatile and security valuations may be negatively affected by unforeseen economic or political events that impact investor expectations, causing security prices to fall in a manner that was not anticipated at the time of purchase. Such events could cause a decrease in liquidity in the securities markets, making it difficult to sell an investment quickly without a substantial price concession. In addition, industry sectors and/or investment styles, such as value investing, may fall out of favor with investors and remain out of favor for an extended period of time.

Equity Risk: Investment strategies that include equity investments are subject to equity market risk. Equity prices may fall in response to many factors including general economic conditions, interest rates, investor perceptions or market liquidity. When financial markets experience periods of severe stress, unusual and extreme volatility may occur in the equity markets and in the prices of individual stocks. A company’s stock price may be negatively impacted even though there is little or no apparent degradation in the financial condition or prospects of that company. This could add to the risk of short term volatility in your account.  Beyond general market risk, the value of an individual security may be more volatile than the market as a whole due to actual, or the anticipation of, unfavorable earnings or some other company-specific event.

We may invest in equities with large, medium or small market capitalizations. Small and mid-capitalization companies may be more vulnerable to industry or economic changes due to more limited financial resources and product lines, and therefore investments in small and mid-capitalization equities tend to be more volatile than investments in larger, more established companies. Additionally, small and mid-capitalization companies typically have less liquid trading markets which can lead to more volatile trading activity.

Fixed Income Risk: All of the investment strategies above may include investments in fixed income securities. Fixed income securities may be subject to interest rate risk, credit risk and market risk.  Interest rate risk is the relationship between interest rates and the valuation of a fixed income security. The value of a fixed income security generally declines if interest rates increase. Conversely, if interest rates fall, the value of a fixed income security generally increases. Fixed income securities with longer maturities are typically more affected by changes in interest rates than those with shorter maturities. Credit risk is the risk that the credit quality of an individual fixed income security is lowered if the financial condition of the issuing company deteriorates. Lower credit quality may lead to greater price volatility and may make the security more difficult to sell. Additionally, as a company’s credit quality deteriorates, the risk of default on principal and/or interest payments increases, which may have a negative impact on a security’s market price. Market risk is the risk that investors demand higher rates due to some economic or other market event causing prices for fixed income securities to fall.

We may invest in convertible securities and/or below investment grade high yield fixed income securities. Convertible securities may offer lower yields than non-convertible securities of similar quality. The value of convertible securities may fluctuate in relation to changes in interest rates, credit quality, market forces and the price of the underlying common stock.

Prices of  below investment grade high yield fixed income securities may be more volatile than investment grade fixed income securities and the trading markets may be less liquid.  Below investment grade high yield fixed income securities involve greater credit risk and may be considered speculative with respect to the issuer’s ability to make interest and principal payments. Deteriorating economic conditions or rising interest rates may weaken the issuer’s ability to pay interest and repay principal more so than issuers of higher-rated securities.

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“When considering each and every investment decision we make at Corbyn, our minds immediately focus on risk.  As long-term investors and careful stewards of our clients’ capital, we must be willing to forego some short-term opportunities as investment managers in order to minimize risk and maximize long-term portfolio appreciation.”

Mike Fusting, CFA – Co-Chief Investment Officer