Our actively managed Short-Duration Municipal Bond Strategy seeks to outperform other short-term investment strategies such as money market funds and treasuries by carefully purchasing short-duration, high-quality, short-call municipal bonds that generate coupon interest. The strategy uses no leverage, nor does it invest in other investment vehicles such as mutual funds or other pooled investment vehicles.
— An actively managed, tax-efficient strategy that capitalizes on portfolio manager expertise and inefficiencies in the secondary municipal bond market
— Maximize returns versus other short-term strategies by investing in short-duration, high-quality municipal bonds which carry interest income exempt from federal and, as applicable, state tax
— Purchase bonds primarily at auctions on the bid side of the secondary market
— Purchase short-call bonds that have bypassed their initial calls and have little or no call history
— Purchase bonds with attractive yield-to-call and yield-to-maturities
— Manager has spent entire career in municipal bond market
— Manager has managed strategy since 2011
— Across SMAs, returns have been consistent since strategy inception
We purchase short-duration, high-quality municipal bonds with short calls and coupons ranging from 3.5% to 5.25% at prices close to the call price, resulting in tax-free yields-to-maturity of 3.0% to 4.25% and net tax-free returns ranging from 2.5% to 3.0% with average duration of less than one year.
We purchase bonds primarily on the bid side of the secondary municipal bond market, allowing us to achieve the best pricing for our clients.
The total universe of bonds available in the market is limited with the estimated size of this market between $4.5 to $6 billion, making it too small for larger funds.
We screen through this universe to identify bonds with a low likelihood of call and attractive potential for returns.
Our due diligence process uses factors such as the bond’s underlying quality, market sector and the municipality’s sophistication and history of calling its bonds.
The COVID-19 pandemic continued to upend the global economy in the third quarter as cases and deaths rose.
The current low inflation environment may be coming to an end following the Federal Reserve’s new inflation monitoring guidelines.
With interest rates nearing zero and stalwart companies cutting dividends, income investing is more challenging than ever before.