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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
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Buyside Digest is not affiliated with, and does not endorse, American Century California High-Yield Municipal Fund. This analysis is provided for institutional research purposes only and is not investment advice.
"California high-yield municipal bonds rebounded in Q2 2026 with solid gains driven by attractive yields and healthy supply/demand. Security selection in workforce housing, charter schools, and hospitals drove outperformance."
California high-yield municipal bonds delivered a solid second-quarter gain after declining slightly in the first quarter, supported by attractive yields and healthy supply/demand dynamics. High-yield munis outperformed investment-grade issues in the risk-on quarter, with credit spreads nearly unchanged to modestly tighter. Security selection drove the portfolio's outperformance versus the benchmark, particularly in workforce housing, charter schools, and hospital sectors, while yield curve positioning also contributed positively. Budget pressures are mounting for some states as spending growth outpaces revenue growth and federal support wanes, though strong reserves should provide a cushion. The manager expects municipal issuance to remain robust, driven by infrastructure investment and affordability-driven housing needs, while investor demand should stay strong given attractive tax-exempt yields. With valuations appearing tight, the portfolio maintains a cautious and selective approach, favoring higher-quality issuers with financial flexibility in sectors like energy prepay, development districts, and multifamily housing that offer potential yield benefits without significant credit risk.
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