High Income Municipal Bond Strategy

In fixed income, over the long run, yield drives total return. In municipal bonds that yield may carry additional tax-efficiency benefits. This high yield municipal bond strategy, available in a separately managed account (SMA), is designed to achieve strong long term total returns derived primarily, if not entirely, from the income produced by the securities held in a given portfolio, much like how the S&P 500’s long term total return has been materially attributed to reinvested dividend income.

The foundation of the process by which portfolios are constructed is an intensive, comprehensive reliance on bottom-up credit analysis. We take the time and make the effort to understand not just the basic profile of a given credit, but also its risk profile, and what remedies are available to us as lenders in the event something goes awry. Subsequently, specific security selection analysis is conducted on a strict relative value basis. This step is critical in an over-the-counter environment such as the municipal bond market. We are not taking risk indiscriminately. We’re striving to adequately compensate shareholders for the risk we take, in a marketplace that affords the professional manager ample opportunities to exploit inefficiencies inherent to that market.

Our aim with this approach is to build portfolios that provide above-market yields so to justify the risk (absolute and relative) represented in the credits behind the securities we select for inclusion.