Process and Strategy

Separately Managed Accounts

Bond investments are held by an independent custodian in bespoke separately managed accounts titled in the name of the client – and not pooled with other’s assets. This transparent approach enables portfolio customization to fit each client’s investment parameters and gives the client direct ownership and control of assets.

Investment Policy & Parameters

Our portfolio management process starts with collaborative investment policy and parameter setting utilizing our Investor Profile and Statement of Understanding document. Bernardi portfolio managers and investment specialists assist each client to establish portfolio goals – creating a bond investment policy tailored to fit their needs. This document identifies client expectations, objectives and financial status.

The Investor Profile & Statement of Understanding is critical for any portfolio; it guides the portfolio managers in constructing a portfolio that complements the overall risk/return profile of the client’s total asset allocation.  It provides the primary roadmap for meeting the client’s needs for their separately managed, fixed income portfolio.

Value Overlay

Our investment strategy is based on a value approach. We target undervalued, healthy credits in out-of-favor geographies and sectors. Our bottom-up credit analysis allows us to take advantage of market inefficiencies in a historically nuanced market.

Credit Analysis

Bernardi’s portfolio management strategy is based on a disciplined municipal credit analysis process developed over the last 50 years. Our process enables us to identify undervalued credits, and identify issues with lurking financial problems. In-depth credit analysis is more important than ever in the wake of the 2008-2009 financial crisis and today’s slow-growth economy.

The core of our evaluation framework revolves around our Three Pillars of credit analysis:

  • Deal purpose – We ask questions such as, “Are the bonds being issued for an essential public purpose? Is the deal for a pool or school, municipal court or tennis court?”
  • Deal structure – We ask questions such as “How is the deal structured? Is there a specific tax or revenue source backing the issue or is it simply a ‘promise to pay’ pledge?” “Is there a tax-intercept?”
  • Underlying credit quality – We examine audited financials, balance sheets, pension, and OPEB funding, among many other metrics.

Flexible Portfolio Management Options

Bernardi offers fee‐only and non‐fee options:

  • Bernardi Asset Management, LLC (BAM) is the fiduciary, fee‐only, SEC registered, investment advisory arm of Bernardi Securities, Inc. (“BSI”). It is a wholly‐owned subsidiary of BSI. BAM management is conducted on a separate account, discretionary or non‐discretionary basis, with BAM serving as an investment advisor with a fiduciary duty. BAM’s investment process is multi‐step and time tested. The client does not pay mark‐up/mark‐down charges. Client payments are based upon percentage of value of assets under management based upon the BAM tiered fee schedule. BAM does not receive any direct or indirect fees from vendors. Securities offered through Bernardi Securities, Inc., member FINRA, SIPC. Advisory Fees are described in BAM’s Part 2 of the Form ADV.
  • Bernardi Securities, Inc. (BSI) is a broker‐dealer, specializing in active municipal bond portfolio management for private clients, public finance services, and fixed income capital market services. BSI management is conducted on a separate account, discretionary or non‐discretionary basis, with a traditional non‐fee payment structure. BSI’s investment process is multi‐step and time tested. Clients pay based on transactions, only when securities are bought or sold. This one‐time cost is captured in the price of the bond and memorialized to clients as requested. BSI is subject to a multitude of regulations including suitability, best-execution, and “know-your-customer.”

Municipal Bond Portfolio Management Overview
A summary of the Bernardi Securities approach to active municipal bond portfolio management.
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