| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 2.99% | 0.18% | 0.18% |
The BBH Intermediate Municipal Bond Fund generated positive returns of 0.18% in Q1 2026, outperforming benchmarks by almost 50 basis points despite challenging market conditions. While the two-year yield remained unchanged, yields increased 25-35 basis points across the rest of the municipal curve, with the 30-year yield ending at 4.50%. The fund benefited from yield advantages and exposure to 15-20 year maturities which outperformed shorter durations. The team actively added opportunities including single and multi-family housing bonds, planned amortization class bonds, and agency-backed multi-family bonds with attractive spreads of 95-110 basis points. The Middle East conflict has created headwinds through higher oil prices and inflation concerns, while the Fed faces difficult policy decisions with rate cut expectations disappearing. Credit risks have emerged from 2025's OBBBA legislation affecting hospitals and states, and private credit market stress impacts prepaid energy bonds. The manager maintains a disciplined approach, carefully managing liquidity while leaning into market dislocations to capitalize on emerging opportunities.
The fund maintains a disciplined approach to intermediate municipal bond investing, focusing on credit quality and opportunistic positioning during periods of market volatility to generate attractive risk-adjusted returns.
While shadows may loom, with solutions not so simple, we continue to adhere to our investment criteria to not only protect the Fund, but also to capitalize on opportunities. Our team and strategy are prepared for times like this.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Apr 18 2026 | 2026 Q1 | MS | credit, Fed policy, inflation, interest rates, Middle East, municipal bonds | - | BBH Intermediate Municipal Bond Fund outperformed benchmarks by 50 basis points in Q1 2026 despite Middle East conflict driving yields higher and creating inflation concerns. The team actively added housing bonds and other opportunities with attractive spreads while managing credit risks from federal legislation and private credit stress. Disciplined approach positions fund to capitalize on market dislocations. |
| Dec 31 2025 | 2025 Q4 | JPM | Credit quality, Federal Policy, healthcare, infrastructure, interest rates, municipal bonds | - | BBH Municipal Bond Fund outperformed in volatile 2025 with 5.4% returns, navigating federal policy shifts that threaten healthcare credits through $900 billion Medicaid cuts. Manager extended duration positioning for attractive yields while maintaining focus on essential infrastructure credits. Anticipates Fed easing under new chair in 2026 creates opportunity for intermediate-term positioning. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q1 |
Private CreditInvestor sentiment related to private credit has turned negative given recent defaults and restricted redemptions. Direct exposures exist via prepaid energy bonds backed by insurance companies that share parent companies with alternative asset managers who have increased exposure to private credit. |
Private Credit Defaults Insurance Energy Redemptions |
InflationThe Middle East conflict has adverse consequences for inflation as higher fuel costs leach into higher transportation costs and consumer goods prices. Many families have already been struggling with affordability issues that have now intensified. |
Inflation Oil Transportation Consumer Affordability | |
RatesThe Fed finds itself in a difficult position seeking to achieve its dual mandate. Investor expectations of two rate cuts have disappeared, with stable policy priced in for the rest of the year. Some investors are beginning to worry that rate hikes may be required to combat rising inflation risks. |
Fed Rate Cuts Policy Dual Mandate Inflation | |
| 2025 Q4 |
Small CapsSmall-cap equities ended 2025 on a positive but volatile note with the Russell 2000 returning 2.2% in Q4. The manager expects a constructive outlook for small-cap equities entering 2026, particularly within value-oriented segments, driven by Federal Reserve monetary easing and improving earnings momentum. Consensus expectations point to meaningful acceleration in small-cap earnings in 2026 with growth projected in the low-to-mid teens. |
Russell 2000 Earnings Valuations Volatility |
ValueThe manager emphasizes that value-oriented stocks remain attractively positioned within small caps. Growth stocks continue to trade at a meaningful premium to value across most valuation measures. Historically, periods of accelerating profits have favored value leadership, particularly within smaller-cap universes, creating a favorable environment for disciplined, fundamentals-driven small-cap value investing. |
Value Premium Growth Premium Fundamentals | |
RatesThe Federal Reserve's shift toward monetary easing represents an important inflection point for smaller companies, which tend to be more sensitive to changes in interest rates and credit conditions. Following a 25 basis point cut in September, the Fed cut rates twice in Q4 to the current range of 3.50% to 3.75%. Lower borrowing costs should support refinancing activity, capital investment, and margin recovery. |
Federal Reserve Interest Rates Credit Conditions | |
EarningsEarnings are central to the manager's optimism with consensus expectations pointing to meaningful acceleration in small-cap earnings in 2026. Growth is projected in the low-to-mid teens and exceeding that of large-cap companies. This anticipated rebound reflects easier year-over-year comparisons, improving operating leverage, and broadening demand across cyclical and value-oriented sectors. |
Earnings Growth Operating Leverage Cyclical Sectors | |
UtilitiesStrong stock selection and favorable allocation made Utilities the largest contributor to relative performance for the quarter. Portland General Electric led gains, supported by regulatory clarity, steady rate base growth, and defensive characteristics that were rewarded as market volatility increased late in the quarter. |
Portland General Electric Regulatory Clarity Defensive |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| No Elevator Pitches found | ||||||||||
| TICKER | COMMENTARY |
|---|---|
| MS | We purchased a 10-year prepaid energy floating rate note backed by Morgan Stanley with a discount margin of 145 bps. |
| Ticker | Put/Call | Amount Bought | Shares Bought | % Change | Weight % |
|---|---|---|---|---|---|
| No Recent Buys Data | |||||
| Ticker | Put/Call | Amount Sold | Shares Sold | % Change | Weight % | Status |
|---|---|---|---|---|---|---|
| No Recent Sells Data | ||||||
| Industry | Prev Quarter % | Current Quarter % | Change |
|---|---|---|---|
| No industry data available | |||
