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.
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 clients 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.
- HIGH INCOME FEDERAL TAX EXEMPT BONDS
- LONG-TERM, YIELD-DRIVEN TOTAL RETURN
- BOTTOM-UP CREDIT ANALYSIS
- VALUE-BASED SECURITY SELECTION
Investing involves risk, including the possible loss of principal. The High Income Municipal Bond Strategy invests in municipal securities that may be rated below investment grade or unrated and may be subject to greater credit, default, liquidity and price-volatility risks than higher-rated securities. The strategy is also subject to interest-rate, call, reinvestment, market and issuer-specific risks. A higher yield generally reflects a higher level of investment risk. There is no assurance that the strategy will achieve its investment objective or produce above-market yields or positive total returns. Interest income generated by the municipal securities purchased for the strategy is intended to be exempt from regular federal income tax. Capital gains, market discount and certain other amounts may remain subject to federal income tax. State and local taxes may also apply. Tax treatment depends on an investor’s individual circumstances, and investors should consult their tax advisers.
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