BRAMSHILL BLOG: From the Desk of Art DeGaetano
The Bramshill Income Performance Strategy performed well in April, up +1.03%, which brings our YTD 2019 performance to +6.59%. Volatility was low for most of April. Credit spreads grinded tighter on the month and US Treasury yields were relatively stable.
Our team did not make many allocation shifts to the portfolio this month. We believe credit risk and interest rate risk are fairly priced at this time. In the past four months, prices for risk assets have risen dramatically. Because the probability of loss in our opinion has increased from the attractive entry points of late 2018, we have not been very aggressive in increasing our risk profile.
In recent weeks, we have allowed our cash/ST US Treasury position to become elevated. This liquidity position now stands at 26% of the Strategy. Our largest allocation remains in preferred securities at approximately 39%. This is a slight decrease from last month. Our allocation to municipal closed end funds remained stable at approximately 12%. We continue to believe there is significant value in these funds, especially with a neutral Fed on the horizon. Our investment grade corporate bond exposure increased slightly to approximately 11% of the Strategy. Our high yield bond exposure was static at approximately 9% of the Strategy. The yield-to-maturity on the portfolio is now 5.28%, and the yield to worst is 4.46%. Our duration remains conservative at 2.21years.
Given the uncertainty of the US economic outlook, trade rhetoric and other factors, we are being patient in allocating at this time. We have an attractive yield on the Strategy and an average credit rating of BBB+. For the near term, we see both credit and rate risk as being fairly priced. We will remain disciplined to allocate only when we see a better opportunity set in the markets and will continue to source investments from our research bullpen.
This commentary is provided by Bramshill Investments, LLC for information purposes only and may contain information that is not suitable for all investors. Certain views and opinions expressed herein are forward-looking and may not come to pass. Investing involves risk, including the potential loss of principal. Past performance may not be indicative of future results, which are subject to various market and economic factors. No statement is to be construed as an offer to sell or a solicitation of an offer to buy securities or the rendering of personalized investment advice. Stated performance is reflective of realized/unrealized capital gains/losses and investment income achieve in composite accounts, net of investment management fees and expenses for trading, custody and fund maintenance (where applicable). Returns reflect the reinvestment of dividends and other such distributions and performance for January 2009 through April 2012 depicts actual returns generated by the strategy while managed by the Firm’s Chief Investment Officer at an unaffiliated investment firm. All information is accurate as of the date of publication and is subject to change without notice.