| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 4.9% | 1.1% | 3.2% |
| 2025 |
|---|
| 3.2% |
The Touchstone Core Municipal Bond Fund underperformed its benchmark during Q4 2025 despite a resilient municipal bond market that demonstrated notable strength amid challenging macroeconomic conditions. The fund maintained its barbell-oriented structure, emphasizing short and long maturities while underweighting the intermediate portion of the curve, particularly the 15-year maturity bucket where strong market returns were concentrated. Performance was influenced by coupon and maturity positioning as stated duration and return duration diverged meaningfully for sub-5% coupon bonds due to deminimis repricing effects. The municipal market absorbed record gross issuance of $565 billion with strong demand from retail investors, separately managed accounts, and ETFs. Credit conditions remained stable with mixed yield curve dynamics as front-end yields rose modestly while longer maturities rallied. Looking ahead to 2026, the managers expect the market to remain supportive but increasingly complex, maintaining a defensive posture focused on BBB-rated credits, housing, prepaid gas bonds, and select transportation issuers where relative value appears most compelling.
The fund seeks to exploit market inefficiencies in municipal bonds using a proprietary income, price and volatility framework while maintaining a barbell-oriented structure that emphasizes short and long maturities while avoiding the richer intermediate segment of the curve.
Looking ahead to 2026, we expect the municipal market to remain supportive but increasingly complex. We plan to maintain a defensive and selective posture within the high-grade universe, continuing to emphasize active curve, coupon, and credit management with a barbell structure remaining central to the strategy.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 31 2026 | 2025 Q4 | - | credit, duration, fixed income, municipal bonds, tax-exempt, yield curve | - | ETFs provided consistent inflows alongside retail investors and separately managed accounts, allowing tax-exempt municipals to outperform U.S. Treasuries during the second half of the year as interest rates declined and technical conditions improved. Yield curve dynamics were mixed during the fourth quarter with front-end yields moving modestly higher while longer maturities rallied, resulting in a flatter curve across intermediate maturities. Rate declines contributed to strong performance in longer-duration exposure. Credit spreads were largely stable with AA and BBB spreads tightening slightly while A-rated spreads widened modestly, reflecting a measured increase in risk premiums for lower investment-grade credits. Overall credit conditions remained stable with continued investor confidence in municipal credit quality. |
| Oct 31 2025 | 2025 Q3 | - | CLO Equity, duration, High Yield Bonds, Spread, Syndicated Loans | - | Credit: A supportive Fed, firm demand, and tight spreads buoy leveraged credit while the fund emphasizes relative value and risk hedging across sectors. Highyield: An 82% high yield bond allocation with a duration overweight seeks to benefit as rates move lower despite spreads near post-crisis tights. Dispersion: Rising single-name dispersion heightens the value of credit selection and avoidance, with off-benchmark tools like CLOs used to preserve yield. |
| Aug 5 2025 | 2025 Q2 | - | credit selection, duration, municipal bonds, tax-exempt income, yield curve | - | The letter centers on tax-exempt municipal bonds amid supply pressures and yield curve steepening. Active credit selection and duration management are used to identify relative value within a challenged muni market. Municipals are positioned as a defensive income source with selective upside. |
| Mar 31 2025 | 2025 Q1 | - | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
Credit StressThe fund is responding to historically low credit spreads by reducing exposure to high yield and other lower-rated debt. They believe current spreads offer insufficient compensation for credit risk and increase the risk of permanent impairment of capital. The managers are downside-focused and do not share the market's optimism needed to justify such low spreads. |
Credit spreads High yield Credit risk Permanent impairment Risk compensation |
ETFsThe fund's strategy focuses on closed-end funds rather than ETFs, but operates in the broader fund ecosystem. They compare performance against closed-end fund indices and utilize various fund structures in their investment approach. |
Closed-End Funds Fund Discounts Fund Selection Alternative Structures | |
RatesFederal Reserve resumed rate-cutting cycle with first cut since December 2024, signaling resumption of easing. Expected three cuts of 25bps between now and first quarter 2026 as Fed responds to signs of weakness in US labor market. |
Fed Monetary Policy Labor Market Easing Liquidity | |
| 2025 Q3 |
CreditFund focuses on elevated carry in high yield credit markets with spreads remaining range bound below 300 basis points. Manager believes high yield credit is fundamentally strong but valuations are tight, particularly in higher quality BBs. Strategy emphasizes sourcing positions with higher income levels given limited price appreciation opportunities. |
High Yield Credit Spreads Carry Investment Grade |
| 2025 Q2 |
Municipal |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| No Elevator Pitches found | ||||||||||
| TICKER | COMMENTARY |
|---|---|
| No ticker commentary found. | |
| 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 | |||
