Philosophy & Process
LM Capital Group’s investment philosophy is grounded in the conviction that macroeconomic trends are the primary driver of fixed income returns. By combining rigorous global analysis with disciplined portfolio construction, we seek to deliver consistent alpha with below-average risk. Our time-tested investment process has provided consistent risk-adjusted returns for our clients.
I. Matrix Construction
The Investment Strategy Group (ISG) uses a proprietary matrix, developed by Co-Founder and Senior Managing Director Luis Maizel during his work at Harvard Business School, to build consensus on the perceived direction of interest rates. Evaluated quarterly across eight developed countries, the matrix examines six critical economic factors: Inflation, Economic Indicators, Monetary Policy, Fiscal Policy, Trade Balance, and Technical Analysis.
II. Security Selection
The Lead Portfolio Manager constructs portfolios exclusively from securities on the firm’s approved list, built through criteria developed by the ISG. Each bond is evaluated on duration, convexity, call features, quality, yield-to-maturity, and additional factors to ensure alignment with client investment guidelines. Every issuer requires an ISG vote for approval.
III. Trend Identification
Through fundamental economic analysis, the ISG scores matrix indicators on a numeric scale ranging from -8 to +8, with double weighting applied to Inflation and Economic Indicators. This scoring process identifies the most attractive fixed income markets and reveals capital flows between countries.
IV. Portfolio Construction
Trend Identification Scores directly inform portfolio positioning relative to the assigned benchmark, guiding decisions on average maturity, duration, and sector/country allocation within the constraints of each client’s investment policy. Positive scores indicate a favorable fixed income environment, extending duration and favoring defensive positioning. Negative scores signal an unfavorable environment, shortening duration and increasing credit exposure.
V. Scenario Analysis
LM Capital rigorously explores the impact of potential political, social, and economic events through its Global Scenario Planning process.
The ISG continuously evaluates potential market scenarios, examining how markets may respond to unexpected political, economic, or social developments. This forward-looking approach allows LM Capital to proactively manage client portfolios through changing economic environments.
Self Discipline
Although LM Capital spends a great deal of time exploring the impact of potential political, social, and economic events through its Global Scenario Planning process, it does not make radical changes in reaction to near-term movements. LM Capital focuses on long-term investment trends.
Short Term