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| # | Fund | Strategy | Style | Geography | AUM | Latest Letter |
|---|---|---|---|---|---|---|
As of Oct 19, 2026
During the third quarter of 2026, the municipal bond market experienced severe turbulence as rising benchmark yields and record primary issuance triggered broad-based repricing, with the Bloomberg Municipal Index declining 6.35% for the quarter and 4.36% in September. Fund-specific net performance figures were not disclosed. In response to heightened volatility, portfolio positioning is structured around a duration-neutral posture, emphasizing higher-coupon structures of 5% and above alongside a barbell framework targeting the 17- to 22-year curve sector to optimize carry and rolldown returns. The macroeconomic environment was defined by resilient economic growth, unpredictable inflation, and expanding capital costs. Long-term rates faced upward pressure from federal deficits and substantial financing requirements linked to artificial intelligence infrastructure. While the Federal Reserve maintained a tightening bias, weakening consumer savings and softening labor indicators suggest the hiking cycle is nearing its conclusion. Concurrently, municipal credit fundamentals demonstrated stability, although state revenue growth decelerated to approximately 2% alongside emerging headwinds from Medicaid policy shifts. Sector allocations reflect disciplined credit selection rather than broad beta exposure. The strategy favors essential service revenue bonds and transportation authorities—such as the New York MTA—given their rate flexibility and tax-supported revenue streams. Conversely, the manager maintains a cautious stance on hospital revenue debt due to margin compression and Medicaid uncertainties, while selectively sourcing attractive yields in prepaid gas structures and new-issue concession opportunities across select BBB municipal credits.
Maintain a duration-neutral barbell structure focused on 5% or higher coupons and essential service revenue bonds to maximize rolldown carry and insulate against rate volatility.
Constructive heading into year-end as decade-high yields provide compelling taxable-equivalent income, with potential volatility from holiday trading, midterms, and Fed policy offering attractive entry points for high-quality bonds.
Moderate Conviction Bullish
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