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Systematic Allocation Guided by Market Phase
AMG Chicago Equity Partners Balanced Fund
Interview with: Patricia Halper, Michael Budd

Author: Ticker Magazine
Last Update: Apr 12, 1:53 PM EDT
Stocks and bonds have their own volatility patterns and risk profiles, so it is important for investors to have allocation that provides downside protection, according to Patricia Halper and Michael Budd, portfolio managers of the AMG Chicago Equity Partners Balanced Fund. Investing in equity and fixed income, the fund strategically shifts its allocation depending on the environment with the help of a systematic process.

ďWe believe that we should take only the risks which we are compensated for.Ē
In terms of fixed income, the big risk contributors over time are interest rate risk, credit risk and liquidity risk. The period of 2007 and 2008 was one of the best performing times for our strategy, because we stuck with our conviction of taking risk when we believe we are compensated, but also focusing only on risks that are appropriate for this strategy.

Q: What lessons did you learn from the global financial crisis?

A: Markets donít always go up and it is really important for investors to have a core allocation that provides downside protection. Thatís what this fund does.

Equity returns are much more attractive than those of fixed income over time, but bond portfolios provide that downside protection. Fixed income accentuates the favorable return component and provides diversification. Thatís why I believe investors should own it.

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