Market Insights from the Bramshill Investments Team.

2021 February Portfolio Commentary

Posted by Bramshill Investments Team on March 17, 2021

BRAMSHILL BLOG:  From the Desk of Bramshill Investments


In February, the Bramshill Income Performance Strategy returned -0.86% on the month, putting our YTD return at -1.13%. US Treasury bonds posted their worst monthly returns (down -5.7% as measured by the Treasury ETF, TLT) since November 2016. In recent months, we have expressed our concern about valuations becoming stretched in many US fixed income asset classes.

For this reason, we maintained a very defensive stance during the month both in terms of credit quality and duration. Over 25% of the Bramshill portfolio was positioned in either short-term Treasuries or other cash-like securities. The portfolio has benefitted from allocations to preferred securities with limited durations (4-5 year durations) which reset off treasury rates (not LIBOR or SOFR), loan CEF’s, and secured high yield bonds with high coupons and low durations. These securities have had much lower price volatility than perpetual fixed rate preferred securities and other long duration assets such as IG corporate bonds to which we have no exposure at this time. Just for context, the long duration IG corporate market fell -3.19% on the month and is now down -5.79% YTD (according to the Bloomberg Barclays Long US Corporate Index). In notable shifts on the month, we took our high yield corporate exposure down from 16% to 14% as we took profits on US Steel 12% ’25 which announced a tender and an equity clawback. We reduced our preferred exposure from 40% to 37% of the Strategy as we sold both AXP and MET floating rate PFDs near par as they were call constrained at that level and had low coupons with minimal upside. Our investment grade corporate exposure and our municipal closed-end fund exposure both remained stable at 11% and 13%, respectively. The recent rise in rates has allowed our team to focus on many new bullpen ideas in U.S. credit. We will cautiously assess these issues as a further tail in rates could present more favorable entry points in long duration securities. This recent fixed income volatility has created more interesting investment opportunities and therefore displacement in the markets. Such situations, in the past, have led us to greater return potential for our Bramshill Income Performance Strategy.


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