Magazine article American Banker

Bond Buying Partners Vie with Lehman Index

Magazine article American Banker

Bond Buying Partners Vie with Lehman Index

Article excerpt

The Woodward Bond Fund was the leading bank-run intermediate U.S. government mutual fund in the country last year.

But don't expect to get an earful of braggadocio from the bond fund's two 36-year-old managers, Douglas Swanson and Ricardo Cipicchio. Woodward's 15.62% return for the year ended Sept. 30 is nice, but it isn't what the pair consider their top achievement.

After all, the Woodward Bond Fund is only one of the three bond portfolios that Mr. Swanson and Mr. Cipicchio manage on behalf of NBD Bancorp's proprietary fund family, the Woodward Funds.

It's the solid gains from all three Woodward bond portfolios as well as some common trust accounts that have the two money managers patting themselves on the back.

We'll take it, Mr. Swanson says of $493 million-asset Woodward Bond Fund's top ranking in its asset class. But we run a lot of other accounts. It's important that they do well, too.

Indeed, Mr. Swanson and Mr. Cipicchio didn't even realize that 15.62% annual posting on the Woodward Bond fund was a bank record, and they've been running the account since its inception in May 1991.

The load portfolio which is distributed by First of Michigan Corp. has averaged a total return of 8.65% since day one. Mr. Swanson says that he and Mr. Cipicchio focus on trying to outperform the Lehman Brothers Aggregate Bond Index. With the Lehman index coming in at 14.1% for the past years, Woodward Bond Fund handily beat its benchmark.

Such success isn't the result of drastic changes in investment strategy from years past, say Mr. Swanson and Mr. Cipicchio.

We used the same philosophy we always have: We're looking for value, Mr. Cipicchio says. That's why we talk to a lot of different brokers on the street every day. You never know where the best deal is coming from next.

The Woodward Bond Fund portfolio typically breaks the following way: 45% in mortgage-backed securities, 40% in Treasury securities, 8% in corporate securities, and the rest mostly in money markets. …

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