Market Insights from the Bramshill Investments Team.

2019 November Portfolio Commentary

Posted by Bramshill Investments Team on December 19, 2019

BRAMSHILL BLOG:  From the Desk of Bramshill Investments

LogoFor the month of November, the Bramshill Income Performance Strategy’s portfolio held up well with a total return of -.01% bringing YTD performance to +8.13%.  Our Strategy has maintained a duration of under 2 years for all of 2019.  Currently, the duration of the portfolio is 1.71 years.  In November, most fixed income portfolios were under some pressure due to volatility in interest rates as the 10-yr US Treasury traded in a 24bps range within the month. 

This year many other US fixed income strategies have benefitted from lower rates.  From both a duration and credit-quality perspective, we have positioned our investments conservatively and continue to maintain that defensive stance. Very few adjustments to the portfolio were made over the course of the month as we continue to look for a more attractive risk/reward re-entry points for most of the asset classes in which the strategy invests.

We would point out, in our opinion, our short duration portfolio is comprised differently than most generic short-dated bond portfolios. About 70% of the portfolio is allocated to positions which have very little interest rate sensitivity. This includes a combination of fixed to float preferreds, short term US Treasuries, and short-dated corporate bonds. Our high yield corporate allocation remained stable at 12% of the portfolio.  Our allocation to investment grade corporates also was stable at 9.5% of the portfolio.  Municipals account for less than 1% allocation at this time (down from over 12% of the portfolio which had been allocated to municipal closed-end funds).  The preferred allocation increased slightly to 37% this month.  We feel this positioning will perform well if the economy continues to recover from the impact of the trade war, Brexit and other cyclical factors which have weighed on the industrial sector.  With the Federal Reserve on hold for the foreseeable future, we will be judicious about allocating capital until valuations correct from both a yield and spread perspective. In the meantime, our portfolio should also perform with an approximate current yield of 4.43% and with certain sector allocations which should outperform in a constructive credit environment.

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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