| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 5.1% | 1.8% | 2.8% |
| 2025 |
|---|
| 2.8% |
American Century's California High-Yield Municipal Fund delivered positive returns in Q4 2025, with the Investor Class gaining 1.84% for the quarter and 2.75% for the year. California municipal bonds performed in line with national munis, supported by a favorable technical backdrop, continued inflows, and Federal Reserve easing. The portfolio outperformed its benchmark through strategic sector allocations, particularly an overweight position in industrial development revenue/pollution control revenue bonds. Security selection in hospital, energy prepay, workforce housing, and charter schools sectors also contributed positively. Municipal bond issuance remained robust at $580 billion for 2025, up 13% from 2024, driven by infrastructure needs and higher building costs. Looking ahead, the managers expect continued strong demand for municipal bonds as investors seek tax-efficient income. While acknowledging potential pressures on healthcare and state sectors from fiscal policy changes, they see opportunities in traditional tax-backed sectors and select non-traditional areas like energy prepay and charter schools, supported by solid state reserve balances.
California high-yield municipal bonds offer attractive tax-exempt income opportunities supported by solid state finances, robust issuance driven by infrastructure needs, and strong investor demand for tax-efficient investments.
The manager expects a K-shaped economy to persist near term with higher-income Americans driving spending while middle- and lower-income earners face rising unemployment and wage pressures. Municipal bond issuance should remain robust due to infrastructure needs, higher building costs and more refunding. Demand for municipal bonds is expected to continue as investors seek tax-efficient income, liquidity and tactical flexibility.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 23 2026 | 2025 Q4 | - | California, Credit quality, energy, high yield, infrastructure, municipal bonds | - | Municipal bond issuance remained robust with fourth-quarter totaling $141.6 billion, particularly heavy in electric power and energy prepay sectors. Total muni issuance in 2025 topped $580 billion, a 13% increase compared with 2024. Infrastructure needs, higher building costs and more refunding are expected to drive continued robust municipal bond issuance. Issuance was particularly heavy in the electric power and energy prepay sectors during the fourth quarter. The portfolio benefited from positioning in the energy prepay sector through security selection. Regulatory easing may help public power and utilities bonds as fiscal policies unfold. |
| Oct 24 2025 | 2025 Q3 | - | California, credit spreads, fiscal policy, interest rates, municipal bonds | - | California munis rebounded on attractive valuations, strong demand, and a Fed rate cut, outperforming Treasuries. Credit fundamentals remain stable as state reserves and fiscal discipline offset slower growth. Managers favor sectors like development districts and essential services while remaining cautious on tight spreads. |
| Jul 23 2025 | 2025 Q2 | - | credit, duration, high yield, Municipals, tax-exempt | - | The commentary focuses on high-yield municipal bonds amid interest rate volatility and heavy issuance. Management emphasizes selective security selection, duration management, and essential-service credits while navigating widening spreads. Tax-exempt income and disciplined risk management remain central objectives. |
| Mar 31 2025 | 2025 Q1 | - | - | - | |
| Sep 30 2024 | 2024 Q3 | - | - | - | |
| Jun 30 2024 | 2024 Q2 | - | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
Energy TransitionThe portfolio maintains significant exposure to electrification themes through companies like Bloom Energy, which provides clean, reliable power solutions for AI data centers. The energy transition represents a structural opportunity as companies race to build power infrastructure to support growing electricity demands from AI workloads. |
Electrification Clean Energy Power Generation Fuel Cells Grid Infrastructure |
Infrastructure SpendingPlaying on the continued theme of infrastructure spending, defense and energy sustainability, positions in Industrial and Energy sectors including Oshkosh, Coterra, OSI Systems, and Herc Holdings added positively to performance. |
Defense Energy Industrial Government Sustainability | |
| 2025 Q3 |
Municipal BondsThe fund invests primarily in tax-exempt closed-end funds holding municipal bonds, using hedging strategies to isolate credit spreads and CEF discounts. Credit spreads between municipal bonds and Treasuries began to reverse the widening that occurred in the first half of the year. The fund's weighted average discount was -6.62% versus historic average of -5.12%. |
Municipal Tax-exempt Credit spreads Discounts CEF |
| 2025 Q2 |
Municipals |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
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