Market Insights from the Bramshill Investments Team.

2020 October Portfolio Commentary

Posted by Bramshill Investments Team on November 12, 2020

BRAMSHILL BLOG:  From the Desk of Bramshill Investments


The Bramshill Income Performance Strategy performed well in the month of October, with a total return of +0.44% resulting in a +1.62% YTD return. October was a reversal of the spread widening environment of this past September. Although US treasury yields were relatively stable, credit spreads migrated tighter throughout the month across most fixed income asset classes.

In the past six months, prices for risk assets continue to rise with limited periods of volatility. During this past spring period, we increased our allocations to preferreds, corporate credit, and municipal closed-end funds. Our opinion then and our opinion now is that securities that are spread over treasuries should continue to perform well. As we continue to analyze the probability of loss on our portfolio, the team has remained comfortable with current positioning that was established months ago. As a result we have made very few adjustments to our overall portfolio. In October we maintained our 14% exposure to municipal closed end funds which are still trading at valuations which are more than two standard deviations cheap from their historical averages, both on an absolute and relative basis. We continue to believe there is significant value in these funds, especially with an accommodative Fed on the horizon. We have a modest 17% exposure to high yield corporate credit with the majority of positioning being in senior secured issues with low LTV’s within well capitalized credits. Our allocation to investment grade corporate credit was reduced from 15% to 14% as our position in ETR 1st lien bonds were called this past month. Our largest asset class allocation is in preferred securities which accounts for approximately 43% of the portfolio (most of which are fixed to reset structures). This allocation was slightly decreased as MET 5.25% PFDs were tendered and as we took profits selling our entire position in APO 6.375% PFD. We have an attractive yield on the portfolio with an approximate 4.96% yield to maturity and 4.23% yield to worst. We also have maintained a modest duration of approximately 3.7 years and credit profile of a BBB average credit rating. Obviously we are all aware of the many uncertainties that lay ahead such as: the US election results, the duration of COVID-19 from a health and economic perspective, and the various government programs and policies, to name a few. We think it is more important than ever to allocate tactically and to remain highly liquid in our positioning. We envision continuing to run a portfolio coupon between 4-6% and to remain significantly invested in higher quality fixed income assets for the foreseeable future.


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