Market Insights from the Bramshill Investments Team.

2021 August Portfolio Commentary

Posted by Bramshill Investments Team on September 17, 2021

BRAMSHILL BLOG:  From the Desk of Bramshill Investments


The Bramshill Income Performance Strategy returned +0.32% net in August, contributing to a +3.56% YTD net total return. Earlier this year, we highlighted our increased appetite for credit risk at attractive entry points. As spreads have ground tighter this year, we have reduced risk. 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 2021. Therefore, we have somewhat reduced risk, taken profits and increased our liquidity position within the Strategy.

In August, we slightly reduced our allocation to preferred securities from approximately 34% to 33% of the portfolio, as one position in ALLY 5.91% pfd was called. The majority of our preferred exposure are reset coupons over treasuries which should benefit the portfolio in a rising interest rate environment. Our high yield corporate exposure reduced from 14% to 12% in the month as our position in Macy’s 8.375% were tendered at T+50, $110.59. This position we had purchased as a new issue at par ($100), at an opportune time in the markets in June ’20 as Covid impacted companies were forced to issue at very investor friendly terms in order to sure up liquidity. Our investment grade corporate bond exposure stayed relatively stable at 14% of the portfolio. We modestly trimmed our municipal closed end fund allocation by about 50bps to approximately 12% of the portfolio. Cash and short-term US Treasuries now represent approximately 28% of the portfolio. There is a fair amount of uncertainty on a number of fronts. Recent US Federal Reserve commentary has indicated they will likely be tapering their bond purchases in the coming months. Economic data seems to indicate the economy may be exhibiting signs of stagflation as prices remain high and the economy slows with supply chain disruptions. Therefore, we have maintained caution both on the rates front and the credit front. Our duration on the portfolio remained stable at 3.03 years. The portfolio has a current yield of 3.77%, a yield-to-worst of 2.61%, 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 expect to deploy our liquidity opportunistically once again in the weeks and months 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