Market Insights from the Bramshill Investments Team.

2023 April Portfolio Commentary

Posted by Bramshill Investments Team on May 15, 2023

BRAMSHILL BLOG:  From the Desk of Bramshill Investments

Logo BlueApril was a solid month for the Bramshill Income Performance Strategy which returned +0.83% on the month and has now returned +1.75 YTD.  In April, we reduced risk into the strength of the markets because we are concerned about upcoming headline risk around the debt ceiling negotiations and continued regional bank pressure.

Thus we elevated our short-term treasury allocation to approximately 39% of the Strategy (which is yielding in excess of 4.7% at this time). The most meaningful driver of returns this month were from the financial sector, which largely recovered from the volatility of March around certain mismanaged financial institutions. In particular, we used this rally as an opportunity to reduce our minimal exposure to regional banks as we sold our position in FITB 4.5% PFD. While our preferred allocation remains at approximately 29% of the Strategy, our exposure to financial preferred securities totals less than 19%, and our regional bank exposure is now less than 4% of the Strategy. Post 1Q23 earnings reports of such names in our portfolio, we are confident in our analysis of our remaining exposure, and we believe that our investments are sound both in terms of liquidity and credit metrics. Our liquidity bucket was also boosted on the month within our investment grade corporate allocation which was reduced to 14% of the Strategy. The main change in this asset class came from the maturity of a 3% position in Boeing (BA 4.508% ’23). If you recall, we had purchased this bond in April 2020, in the midst of COVID. Boeing was one of the first new issues to come to market that spring upon the capital markets reopening. We also decreased our IG exposure moderately by trimming positions in NRUC 5.5 ’64 and SF 5.2 ’47 which are baby bonds that were trading fairly tight after the rally in $25 par market. We maintained a stable allo¬cation of approximately 8% to municipal CEFs, which are currently still attractive as they are trading in excess of 12% discounts to NAV. As mentioned last month, these CEFs should benefit from a potential Fed pause and the recent treasury curve bullish steepening. Our high yield corporate exposure also remained stable at approximately 8% of the Strategy. We continue to believe there is much better value in a short duration portfolio at this time. The duration on our portfolio is now 2.51 years with a YTM of 6.19% and YTW of 6.11%. We believe there will likely be volatility during the debt ceiling negotiations in the coming weeks. We expect to re-invest our liquidity during such times of dislocation and volatility. You should expect us to allocate portions of this liquidity in the coming months as we have in past disruptive periods.

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