BRAMSHILL BLOG:  From the Desk of Bramshill Investments

The portfolio returned -0.55 % for the month of March, however, the Strategy has returned +1.78% YTD. Back in early January, in our 1st Quarter Webinar, we conveyed our view the Fed would be less relevant early in the year until they received more clarity on the incoming Trump administration’s policies.

We also stated the Fed would likely cut at least two or three times later this year due to an economic slowdown as a result of cuts to government expenditures and reduced consumer spending. Since that time, our conviction in such views has only become more fervent. As of this writing, many of the large investment banks have increased their forecast for a US recession to greater than a 50% probability (a result of tariffs announced last week). If you recall, in January we also stated that our quantitative models indicated credit spreads were overvalued across most of our asset classes. Thus, we chose to position the portfolio with more interest rate risk over credit risk. During 1Q25, the 10-year US Treasury yield decreased by 37bps. while the S&P 500 returned -4.27%. We believe this reflected lower growth expectations as GDP expectations have been ratcheted lower by several Wall St. Banks. For these reasons, we have steadily added to our position in long duration treasuries which now stands at approximately 24% of the Strategy. Our largest allocation is within high quality investment grade corporate bonds. In March, we increased this allocation from approximately 39% to 40% of the Strategy as we initiated a new position in long dated, low dollar price, OXY bonds which is a credit we favor and which trades wide for its credit metrics. In preferreds, we maintained an approximate 20% allocation. Our preferred allocation remains primarily in $1000 par fixed-reset structures with limited spread duration. Even in the face of elevated volatility in the preferred market this year, these structures have proven resilient due to their limited spread duration. In high yield, we maintained an approximate 4% allocation. While we remain cautious on high yield, if volatility continues to increase, we will be poised to add to names we find attractive which can withstand a recession. We slightly reduced our municipal allocation in closed-end funds to approximately 2% of the Strategy. Our cash plus short term treasury allocation decreased from approximately 15% to 11% of the portfolio. We see value in long duration fixed income as we anticipate a slowdown in the economy. For a more complete discussion of our positioning, investment rationale and current views, please join our 2Q25 Webinar on April 9th (See Registration link, here).