Market Insights from the Bramshill Investments Team.

2019 March Portfolio Commentary

Posted by Bramshill Investments Team on April 12, 2019

BRAMSHILL BLOG:  From the Desk of Art DeGaetano

The Bramshill Income Performance Strategy returned +0.39% net in March, contributing to a+5.50% YTD net total return.  Earlier this year, we highlighted our increased appetite for credit risk at attractive entry points.  We continue to believe the US credit market is healthy because we are constructive on the US economy and its growth prospects.  However, prices for these assets have appreciated significantly in 1Q19.  In March, we reduced our allocation to preferred securities from approximately 47% to 41% of the portfolio. 

Our high yield and investment grade corporate bond exposure stayed relatively stable at 9% and 10%, respectively. One notable addition to our portfolio was a Vodafone new issue subordinated bond which was issued at 7% and moved sharply higher in the secondary market. We maintain high conviction in our municipal closed end fund allocation which we increased to approximately 12% of the portfolio.  Cash and short-term US Treasuries now represent approximately 25% of the portfolio. 

Our outlook for interest rate risk did shift slightly in March as recent US Federal Reserve commentary indicates they will be on hold in the near term and will cease the runoff of assets on the balance sheet by mid 2019.  Therefore, we decreased our US Treasury hedge by approximately one-half this month. As a result, our duration on the portfolio extended from 0.9 years to 2.11years.  The portfolio has a yield-to-maturity of 4.88%, a yield-to-worst of 4.16%, and a BBB+ average credit rating.  We believe that both credit risk and rate risk are fairly neutral at this point in the cycle and therefore, it is a favorable environment for income strategies such as the Income Performance Strategy.  We will deploy our liquidity opportunistically once again in the weeks ahead.


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.

Topics: Commentary