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| # | Fund | Strategy | Style | Geography | AUM | Latest Letter |
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The Touchstone Core Municipal Bond Fund underperformed its benchmark during Q2 2026, returning 2.37% versus 2.50% for the Bloomberg Municipal Bond Index. The municipal bond market rebounded during the quarter as elevated yields, supportive technical conditions, and resilient investor demand offset concerns surrounding record issuance and moderating economic growth. The Fund's barbell yield curve positioning contributed positively as the municipal yield curve experienced significant flattening between 10- and 30-year maturities. Top contributors included Eagle River Colorado Water & Sanitation District, Will County Illinois, and Upland Indiana Economic Development Revenue bonds, which benefited from favorable yield curve dynamics. Detractors included Black Belt Energy Gas District Alabama and Westmoreland County Pennsylvania Municipal Authority, reflecting weakness in higher-coupon prepaid gas bonds and widening hospital-sector credit spreads. The Fund maintains a modestly long-duration posture with a structural overweight to select single-A rated credits. The outlook for the remainder of 2026 remains constructive, supported by strong municipal fundamentals, seasonal reinvestment demand, and continued fund inflows, though valuations are considerably richer following the second-quarter rally.
The Fund seeks to exploit market inefficiencies in the municipal bond market using a proprietary income, price, and volatility framework, constructing portfolios that generate consistent tax-free income by capturing diversified sources of credit, liquidity, and term premiums while controlling price sensitivity through duration and yield curve positioning.
The outlook for the remainder of 2026 remains constructive. Municipal fundamentals remain strong, seasonal reinvestment demand is expected to remain supportive through much of the summer, and continued fund inflows should provide meaningful technical support. While municipal valuations are considerably richer following the second-quarter rally, attractive tax-exempt income, healthy credit conditions, and favorable technical factors continue to support the asset class. Future returns are likely to depend increasingly on coupon income, yield curve positioning, and active management as the municipal market becomes more differentiated and issuer-specific opportunities emerge.
As of Jul 28, 2026
The Touchstone Core Municipal Bond Fund is managed by Jeffrey S. Timlin, CFA, CMT, who serves as Lead Portfolio Manager for Sage Tax-Exempt Fixed Income Strategies at Sage Advisory Services, the fund's sub-advisor. Timlin brings over two decades of experience in tax-exempt fixed income, having joined Sage Advisory Services in 2003 after starting his career at MFS Investment Management in 1999. He holds a Bachelor of Science in Business Administration from Villanova University and maintains professional designations as both a Chartered Financial Analyst and Chartered Market Technician. His expertise is supported by an experienced team including Robert G. Smith III as Managing Member and CEO, and Thomas H. Urano, CFA, as Co-Chief Investment Officer of Sage Advisory Services. Timlin actively participates in professional organizations including the CFA Institute, Market Technicians Association, National Federation of Municipal Analysts, and Southern Municipal Finance Society. The fund manages $42.5 million in assets as of December 31, 2025, with a focused portfolio of 82 municipal securities maintaining disciplined credit quality standards.
The Fund seeks the highest level of current income exempt from federal income taxes, consistent with the protection of capital by investing primarily in high-quality, municipal debt issued by U.S. states and their subdivisions, authorities, instrumentalities and corporations, as well as obligations issued by U.S. territories. Municipal issues are analyzed through a proprietary approach for various environmental, social and governance (ESG) criteria. The strategy focuses on exploiting market inefficiencies within the municipal bond market through active management and rigorous credit analysis. The fund maintains a disciplined approach to credit quality, with the portfolio predominantly rated AA/Aa and A/A, reflecting management's commitment to capital preservation while seeking attractive yield opportunities. The fund utilizes the Bloomberg Municipal Bond Index as its primary benchmark and provides monthly income distributions to ensure consistent cash flow generation. The investment approach integrates traditional municipal bond analysis with ESG criteria through Sage Advisory Services' proprietary framework.
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