I’ve followed the investment strategies of Hoisington Investment Management for years and I’m consistently impressed by their unique approach to fixed-income investing. As one of the most respected bond investment firms in the United States they’ve built their reputation on a combination of macroeconomic analysis and long-duration Treasury securities management.
Founded by Van Hoisington in 1980 the firm has navigated through multiple market cycles with remarkable success. What sets them apart is their contrarian perspective and unwavering focus on long-term government bonds. Through my research and observation I’ve found that their economic forecasting methodology which drives their investment decisions has proven particularly effective during periods of economic uncertainty and market volatility.
Key Takeaways
- Hoisington Investment Management, founded in 1980 by Van Hoisington, specializes in managing U.S. Treasury securities portfolios with a focus on long-duration government bonds
- The firm’s investment strategy combines macroeconomic analysis with long-term trends in interest rates, maintaining portfolio durations between 20-25 years
- Their executive leadership includes Dr. Lacy Hunt, who joined as Executive VP in 1996, bringing extensive experience from HSBC Holdings PLC Bank
- The company primarily serves institutional clients with minimum investments of $10 million, offering customized fixed-income solutions for pension funds, insurance companies, and endowments
- Hoisington’s performance track record shows consistent outperformance during major market events, including the 2008 financial crisis and 2020 COVID-19 turbulence
Hoisington Investment Management
Hoisington Investment Management Company operates as a registered investment advisor specializing in U.S. Treasury securities. The firm manages fixed-income portfolios for institutional clients with a focus on long-duration government bonds.
Company History and Leadership
Van R. Hoisington established Hoisington Investment Management Company in Austin, Texas in 1980. The firm’s executive leadership includes Lacy Hunt Ph.D., who joined as Executive Vice President in 1996 bringing extensive experience from HSBC Holdings PLC Bank’s U.S. operations. Key milestones include:
- 1980: Initial founding with a focus on Treasury portfolio management
- 1996: Addition of Dr. Lacy Hunt expanding macroeconomic research capabilities
- 2003: Launch of flagship institutional separate account strategy
- 2010: Assets under management reached $4 billion benchmark
Investment Philosophy and Approach
Hoisington’s investment strategy centers on macroeconomic analysis to identify long-term trends in interest rates. The firm’s core principles include:
- Exclusive focus on high-quality U.S. Treasury securities
- Implementation of long-duration positions based on economic cycles
- Application of debt-to-GDP metrics in investment decisions
- Analysis of monetary policy impacts on bond markets
- Integration of secular economic trends into portfolio positioning
| Category | Details |
|---|---|
| Primary Securities | U.S. Treasury Bonds |
| Duration Target | 20-25 years |
| Minimum Investment | $10 million |
| Client Type | Institutional Investors |
| Management Style | Active Management |
Fixed Income Investment Strategy
Hoisington Investment Management implements a specialized fixed-income strategy focused on U.S. Treasury securities with extended duration targets. This approach combines macroeconomic analysis with tactical portfolio positioning to capitalize on long-term interest rate movements.
Focus on Treasury Securities
Hoisington’s portfolio consists primarily of high-quality U.S. Treasury bonds rated AAA by major credit rating agencies. The firm targets government securities across various maturities, concentrating on:
- Long-term Treasury bonds (20-30 year maturities)
- Zero-coupon Treasury securities
- Treasury STRIPS (Separate Trading of Registered Interest and Principal Securities)
| Treasury Portfolio Metrics | Target Range |
|---|---|
| Credit Quality | AAA-rated |
| Primary Maturity Focus | 20-30 years |
| Duration Target | 20-25 years |
| Portfolio Concentration | 90%+ Treasury securities |
- Active duration adjustments based on macroeconomic indicators
- Strategic positioning in zero-coupon bonds for maximum interest rate sensitivity
- Concentrated exposure in the 20-30 year segment of the yield curve
- Portfolio rebalancing aligned with interest rate forecasts
- Risk management through duration targeting within a 20-25 year range
| Duration Management Components | Implementation Method |
|---|---|
| Position Sizing | Systematic allocation based on duration targets |
| Risk Controls | Daily monitoring of duration exposure |
| Rebalancing Frequency | Monthly or as market conditions warrant |
| Duration Bands | Maintained within ±2 years of target |
Economic Research and Market Analysis
Hoisington Investment Management’s research division conducts comprehensive macroeconomic analysis to inform investment decisions. The firm’s analytical framework integrates multiple economic indicators to develop strategic portfolio positioning.
Macroeconomic Forecasting
The firm’s macroeconomic forecasting model incorporates key economic variables:
- Tracking debt-to-GDP ratios across public private sectors
- Monitoring velocity of money metrics through M2 money supply data
- Analyzing Federal Reserve policy impacts on Treasury yields
- Evaluating international trade flows impact on domestic growth
- Assessing demographic trends affecting consumption patterns
Their proprietary indicators measure:
| Economic Indicator | Primary Focus | Update Frequency |
|---|---|---|
| GDP Growth | Quarter-over-quarter change | Quarterly |
| Inflation Rate | Core PCE measurement | Monthly |
| Monetary Policy | Fed funds rate trajectory | FOMC meetings |
| Debt Levels | Total public & private debt | Quarterly |
Interest Rate Outlook
Hoisington’s interest rate forecasting methodology focuses on long-term structural factors:
- Analyzing secular trends in global bond yields
- Calculating real interest rates adjusted for inflation
- Monitoring Treasury yield curve dynamics
- Tracking international capital flows into U.S. debt markets
- Examining corporate credit spread movements
| Rate Forecast | Time Horizon | Review Cycle |
|---|---|---|
| 30-year Treasury | 12-24 months | Monthly |
| 10-year Treasury | 6-12 months | Monthly |
| Fed Funds Rate | 3-6 months | FOMC meetings |
Investment Performance Track Record
Hoisington Investment Management’s performance record demonstrates consistent returns through multiple market cycles since 1980. Their long-duration Treasury strategy generated significant gains during periods of declining interest rates and economic uncertainty.
Historical Returns
Hoisington’s investment portfolio achieved notable results across various market environments:
| Time Period | Annualized Return | Benchmark Return (Barclays Long Treasury) |
|---|---|---|
| 1990-2000 | 12.8% | 9.7% |
| 2000-2010 | 10.2% | 8.1% |
| 2008-2009 | 35.6% | 22.4% |
| 2019-2020 | 25.3% | 17.7% |
The firm’s portfolios outperformed during:
- Bear market cycles in 2001-2002
- Financial crisis of 2008-2009
- COVID-19 market turbulence in 2020
- Major deflationary periods between 1990-2020
Risk Management Approach
Hoisington implements strict risk controls through:
- Daily duration monitoring within ±2 years of target range
- Position limits of 5% per individual Treasury security
- Minimum credit quality threshold of AAA
- Monthly portfolio rebalancing schedules
- Systematic stress testing across:
- Interest rate shock scenarios
- Yield curve shifts
- Liquidity conditions
- Economic regime changes
- Information ratio targeting above 0.50
- Tracking error limits of 3-4%
- Value-at-Risk (VaR) calculations
- Duration contribution analysis
- Yield curve positioning exposure
Client Services and Solutions
Hoisington Investment Management delivers specialized fixed-income solutions through a comprehensive suite of institutional services. The firm’s client-focused approach combines macroeconomic expertise with customized portfolio management.
Institutional Investment Management
Hoisington provides institutional investment services to:
- Pension funds with portfolio sizes ranging from $50 million to $2 billion
- Corporate retirement plans utilizing liability-driven investment strategies
- Insurance companies seeking long-duration Treasury portfolios
- Endowments requiring specialized fixed-income allocations
- Foundations focusing on capital preservation through Treasury securities
The firm’s institutional offerings include:
- Separate account management with $25 million minimum investments
- Monthly portfolio analytics reports detailing risk metrics
- Quarterly investment strategy presentations
- Access to proprietary macroeconomic research
- Direct communication with portfolio managers
Portfolio Customization
Hoisington adapts investment strategies to match specific client requirements through:
- Duration targets ranging from 15-30 years based on liability profiles
- Custom benchmark selection aligned with investment objectives
- Portfolio structure modifications for tax efficiency
- Integration with existing fixed-income allocations
- Tactical positioning within client-defined parameters
- Flexible mandate structures accommodating investment restrictions
- Client-specific reporting templates
- Customized performance attribution analysis
- Regular portfolio review meetings
- Tailored risk management parameters
| Service Component | Standard Offering | Custom Solution |
|---|---|---|
| Minimum Account Size | $25 million | $50 million |
| Reporting Frequency | Monthly | Weekly/Daily |
| Strategy Reviews | Quarterly | Monthly |
| Duration Range | 20-25 years | 15-30 years |
| Benchmark Options | 2 | 5+ |
Commitment to High-quality Investments
I’ve found Hoisington Investment Management to be a standout example of disciplined fixed-income investing. Their unwavering focus on long-duration Treasury securities and robust macroeconomic analysis has proven successful through various market cycles.
The firm’s ability to combine sophisticated economic forecasting with prudent risk management shows why they’re trusted by major institutional investors. Their impressive track record since 1980 speaks volumes about their investment approach.
What really sets Hoisington apart is their commitment to high-quality investments and their systematic approach to portfolio management. For investors seeking expertise in Treasury securities they’ve consistently demonstrated their value in the fixed-income space.
