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Fixed Income
United States automobile sales have been on the rise for seven consecutive years, setting a new record high in 2016. Low gas prices, falling unemployment, and range bound interest rates kept cars moving off dealership lots at record levels. Further contributing to the record auto sales climb has been the extension of lease and loan terms. With low interest rates and more affordable payment options, those looking for a new car are being lured back into the market. However, as a fixed income investor, we do not believe the record level of auto sales and more recent extension of credit terms is all positive news for the sector. In this market update, we explain the key components we are monitoring in auto loan and auto lease asset backed deals, trends in auto lending, and how Galliard is navigating an auto market that has seemingly reached its peak.


Fixed Income
Traditionally, corporate bond trading has required direct communication between dealers and investment managers. While most trading still occurs in this manner, technological advances are transforming this space and electronic trading is growing in importance. As new trading platforms emerge, corporate bond trading is beginning to shift from over-the-counter trading between dealers and investment managers to electronic marketplaces. Within this ‘Fixed Income Insights’ we will explore the driving factors of this evolution in secondary trading, the current state of the electronic marketplace, and how we view and use electronic trading at Galliard Capital Management.


Galliard News
Minneapolis, MN (February 10, 2017) - Galliard Capital Management Inc. announced today that it has become a signatory to the United Nations-supported Principles for Responsible Investment (PRI)


Stable Value
Money market fund reform has altered the capital preservation landscape and has led to a renewed interest in stable value from defined contribution plan sponsors who utilize money market mutual funds (or “money market funds”). In this issue of Stable Value Analyst Insights, we provide a summary of the key amendments adopted by the U.S. Securities and Exchange Commission (SEC) to the money market fund rules. We also highlight key differences between money market funds and stable value funds. Lastly, we revisit the compelling case for stable value as a defined contribution capital preservation option. The SEC amendments to the money market fund rules did not directly impact stable value. However, we believe the impact of reform on money market funds further strengthens the case for stable value as an optimal principal preservation choice compared to money market funds.


Fixed Income
Recently, taxable municipal bonds have seen growing interest in the marketplace. This makes sense, as the sector presents attractive investment opportunities given its yield advantage over U.S. Treasuries and its history of low default and high recovery rates. Galliard has been an investor in the taxable municipal bond market for over 20 years — since firm inception — seeing it as a viable alternative to the corporate bond market and an attractive option for core bond portfolios, particularly long credit mandates. As of August 31, 2015 we manage nearly $3 billion in taxable municipal bonds from over 400 different issuers across the maturity curve. In this issue of Fixed Income Analyst Insights, Galliard’s Chief Investment Strategist, Richard Merriam, and taxable municipal specialists, Brandon Kanz and Will Moeller, discuss Galliard’s perspective and differentiators in the municipal space.


Stable Value
At its core, stable value is a fixed income investment, so it stands to reason that plan sponsors, consultants, and stable value investors may be concerned about the prospect of rising interest rates. However, we believe that the unique protections provided by stable value will benefit investors in a rising rate environment.


Fixed Income
In this issue of Fixed Income Perspectives, Karl Tourville and Carrie Callahan discuss how a disciplined adherence to guiding investment principles has allowed Galliard to generate consistent, value-added performance over time.


Stable Value
Crediting rates are a key component of stable value investing. We address how a stable value crediting rate works and the role that the crediting rate plays in determining the overall blended yield of a stable value fund. Our focus is on the crediting rate for synthetic guaranteed investment contracts (GICs also known as security backed investment contracts), although much of what we cover also applies to participating separate account GICs as well. The discussion is less relevant to traditional GICs and non-participating separate account GICs, since these are typically fixed or floating rate fixed maturity contracts and are not addressed.


Stable Value
Stable value was created specifically for use in retirement plans and is the only fixed income investment option available that seeks to provide contract value payouts (principal plus accrued income) for participant transactions instead of market value payouts. The contract value protection feature is a key reason why stable value has been and remains among the most popular investment choices of retirement plan participants since the 1970s.
Galliard has extensive experience evaluating investment contract issuers, as well as negotiating and managing a variety of types of stable value investment contracts for its clients. Following is an overview of three commonly used types of stable value investment contracts available in the market today: Traditional GICs, Separate Account GICs and Synthetic GICs (also called Security Backed Investment Contracts).
Galliard has extensive experience evaluating investment contract issuers, as well as negotiating and managing a variety of types of stable value investment contracts for its clients. Following is an overview of three commonly used types of stable value investment contracts available in the market today: Traditional GICs, Separate Account GICs and Synthetic GICs (also called Security Backed Investment Contracts).
