T-Bill Ladder Strategy

The hot topic in financial news for at least the first three quarters of this year has been rampant inflation, and the Federal Reserve’s efforts to curb it by raising its benchmark interest rate, the federal funds rate, through a series of systematic rate hikes that began in March. Subsequently, we have seen the fastest pace of rate increases in history. In recent months, the team here at Copia has been making a tactical shift in our fixed income (bond) and cash holding strategy to help mitigate bond market volatility and take advantage of higher short-term rates. 

Many of you likely already know (and if you don’t, here’s my best shot at a quick lesson) that interest rates have an inverse correlation to the price, or value, of bonds – meaning that when interest rates rise, the values of issued physical bonds fall … and vice versa. While slightly confusing and not exactly intuitive, the reason for this is fairly simple: older bonds with lower interest rates become less valuable because their coupon payments are now lower than those of new bonds being offered in the fixed income market. Investors would obviously prefer to have a higher coupon, or interest rate, so the older bonds trade at a discount to new bonds with higher coupons. 

Now, a traditional “Moderate” to “Conservative” investment portfolio might contain anywhere from 20 – 60% of fixed income in the form of bond funds, either by way of Mutual Funds or Exchange Traded Funds (ETFs). By owning bond funds, investors not only get a diversified portfolio of bonds with varying degrees of quality, durations and expected yields, but they also receive the benefit of an appreciation in the price of a fund when amid an interest rate decreasing environment (remember: rates down = values up). Interest rates have been in a secular cycle of decline since the peak of interest rates in mid-1981, which has helped “traditional” bond portfolios provide a relatively safe “shock absorber” to an investment portfolio that also has exposure to equities (or stocks). Longtime clients of Copia might be familiar with ETF symbols AGG, LQD, TLT, MBB, BSV, and SHY, which have been staples in portfolios for many years. Until recently. 

Our shift in strategy within fixed income removes these bond funds and replaces that portion of the portfolio with physical individual bonds. Specifically, our strategy is called a T-Bill Ladder Strategy, and it works best in interest-rate rising environments. It is called a “ladder” because we purchase a U.S. Treasury Bill with a maturity that starts 30 days out, and then additional bonds in 30-day increments up to about 150 or 180 days out. So, if we have 5 or 6 bonds each about 30 days apart, we have a bond that matures every 30 days. At maturity, we then can reinvest at the back end of the curve, at what will likely be an even higher interest rate. Hopefully, you can visualize “climbing the ladder” … every 30 days we “take a step” and reach for a new rung (buy a new bond at the end of the ladder). We can continue this practice for as long as it makes sense and there is increasing value in interest-rate yield in the curve. The other thing we like about this strategy is it gives us new liquidity every 30 days to potentially add some capital back into equities at further depressed prices if we continue to see downward pressure in the market. 

Currently, the 6-month T-Bill is yielding above 4.4%, and it’s important to know that T-Bills are about as safe as an investment can get as they are backed by the full faith and credit of the United States Government. Compare this to a Certificate of Deposit (CD), which is another shorter-term investment vehicle that is commonly referred to as “safe,” but is backed only by the financial institution that issues it (much higher likelihood of default). 

Hopefully, this helps paint a picture of what we’re doing right now in fixed income portfolios, and you can see the three key values of this strategy: 1) we remove portfolio price fluctuation by eliminating bond funds; 2) we get to take advantage of high, and increasing, short-term interest rates; and 3) we get the optionality every 30 days to either continue to invest in physical bonds, or reallocate toward equities at better entry prices. If you have any questions or have some excess cash that you want to yield at higher rates with very little risk, give us a call in the office! 

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Relationship Specialist

Ben
Graziani

Another accomplished local student-athlete joins the Copia family.

Ben grew up in Palm Desert, California, before moving to Bend, Oregon, right before high school. 

Ben Graziani

He graduated in 2018 from Summit High with a 4.0 GPA, lettering for three years at wide receiver and helping the Storm football team to an OSAA Class 5A State Championship and back-to-back Mountain Valley Conference Championships. He was named a first-team all-league and second-team all-state selection in football. Additionally, he was part of a State Championship 4×400-meter relay team as a junior. He also lettered in basketball.

After high school, he attended Southern Oregon University, where he earned an undergraduate degree in Business with a concentration in Finance. He was a member of the school’s leadership council for three years. He also played football for five years for the Raiders, scoring 8 touchdowns in 13 total starts in a career shortened due to Covid-19 and a collarbone injury. Post-college, he joined the Summit HS football staff as the Varsity Wide Receivers Coach.

 

Ben football

Ben is extremely close with his family. His parents, Tony and Sarah, live and work in Bend, and his younger brother (Montana State) and sister (University of Oregon) both currently attend college. He feels super fortunate to join the Copia team because of how much they value relationships and often put others before themselves. He is super excited to meet all the members of the Copia family and is ready to help in any way that he can!

Ben Fam

Relationship Specialist

George Mendazona

George graduated from Redmond's Ridgeview High School in 2016, following a standout prep baseball career.

George grew up in Madras, Oregon, and graduated from Ridgeview High School in Redmond in 2016, after a standout athletic career where he was an OSAA All-State performer in baseball (three times), basketball (twice), and football (once). He was also recognized as the Intermountain Conference Player of the Year in both Baseball and Basketball in 2015. After high school, he was offered a roster position as an infielder for the Oregon State Beavers baseball program and was part of the 2018 NCAA National Championship team.

After four years at OSU, George transferred to Lubbock Christian University to complete his Bachelor’s Degree in Exercise Science. Instead of pursuing a professional baseball career, he put his Exercise Science degree to work, moved back to Bend, and served as a strength and conditioning coach at Boss Sports Performance.

He considers himself a family man and puts a major personal emphasis on carrying that out on a daily basis. Recognizing that Copia is a family-oriented firm with strong values consistent with his own, George is excited about building relationships with all existing and future Copia clients and is eager to apply his previous experience as a leader on elite teams to learn a new industry and business.

Chief Compliance & Operations Officer

Geoff Gruetzmacher

After serving a 17-year career in firefighting, Geoff has transitioned to wealth management.

Geoff retired from the City of Kennewick, WA Fire Department in 2020, started with Copia in 2021 and is now a fully licensed Fiduciary Advisor of Copia.

During his time as a firefighter, Geoff served as a leader of both an engine and an ambulance crew, enjoying the team aspect of the job and working to achieve a common goal.

Ultimately, Geoff simply wants to continue helping people in a meaningful way. Copia Wealth Management gladly welcomed Geoff to the team for his experience in operations and relationship building. Geoff is now a fully licensed IAR of Copia Wealth Management and always looks forward to conversations with clients. He volunteers with Bend North Little League and works with Bend area animal rescue non-profits.

Geoff graduated from Redmond High School, has been married to his wife, Lindsay (Bend High Grad) for 17 years and has three children, Halle (16), Henry (13), and Harper (10). Geoff enjoys exploring the outdoors with his family, baseball, and cooking.

Fiduciary Advisor
Chief Strategy Officer

Louis Bennett

A fifth-generation Oregonian, Louis moved to Bend in 1995.

He graduated from Bend High in 2003, and attended Point Loma Nazarene University in San Diego.

There he played college golf and graduated with a
degree in Business Administration (concentration in Finance. His work career began as a golf professional which spanned nearly a decade, serving as the Head Pro at Broken Top Club and Tetherow Resort here in Bend. Realizing that in order to continue his ascent in the golf industry that he’d likely have to move his family, and desiring to help people on a deeper level, he made a huge career change and joined the Copia team in February of 2016, and became partner a year later. He enjoys statistical analysis, strategic planning, working in a team environment, and coaching/mentoring/leadership roles.

Louis married his wife, Marrisa (a born-and-raised Bendite), in 2011, and they are proud parents of Jordyn (17), Cambria (9) and Silas (7). He still enjoys playing golf as much as he can, exploring the outdoors with his family, and coaching a variety of sports for kids of all ages, including coaching the Varsity & JV Boys Golf team at Bend High.

FIDUCIARY ADVISOR
PRESIDENT

Aaron Boehm

Aaron has built a successful financial services firm with a simple mindset: he puts relationships first.

Aaron is the President and Fiduciary Advisor of Copia Wealth Management in Bend, Oregon.

With over 20 years of experience, he has managed over $500 million in client assets and has helped hundreds of families reach their financial goals. Having started his career working on the 61st floor of the World Trade Center in New York City, Aaron now enjoys his street-level office in the Old Mill District in Bend, Oregon. But it’s the relationships he has cultivated with clients and firm partners that make Copia what it is today.

Besides serving as a fiduciary to his clients, Aaron also loves coaching baseball at various youth levels. He has been a member of the Summit High School Varsity staff for the past seven years and has run a competitive travel team for both of his boys during this same time. Most importantly, 100% of all the athletes Aaron has coached at the Varsity level have graduated from high school and the team has led the State of Oregon for team GPA five out of the past six years. Go Storm!

When he isn’t sitting on a ball bucket in the yard rooting for the boys, Aaron loves spending time with his wife Katie, sons Nolan (15) and Miles (12), and all their friends. Simple barbecues and backyard games are frequent around the Boehm home in the summers. Aaron is also very active and enjoys golf, fishing, white water rafting, and any other adventures his friends are up for.