In the month of October, our portfolio performed well returning +0.66%, bringing YTD returns to +5.35%.
This year we have not wavered in our opinion that the US economy is decelerating, consumer spending is waning and employment trends are not favorable. Thus, we have maintained a longer duration bias in the portfolio than in recent years, as we believe rates will gravitate lower. In 2025, the first quarter of the year confirmed our view as 10-year US Treasury rates dropped from 4.57% to 4.17%. During 2Q25, 10-year US Treasury rates marched higher to a peak of 4.60% during a period of uncertainty regarding both US tariff policy and US tax policy. Since May 21st, 10-year US Treasury rates have resumed this downward bias toward 4%. We believe this trajectory of lower rates will continue. We made very few asset allocation changes to the portfolio in October as we allowed our liquidity position to grow. Our largest allocation remains within high quality investment grade corporate bonds. We slightly reduced this allocation from approximately 45% to 43%. One allocation we had to a short BAC bond matured during the month. We chose not to reinvest the proceeds. One positive credit development on our portfolio was that OXY confirmed they would proceed with a large asset sale of its chemical business and will, in fact, use the proceeds for debt reduction. The company expects to reduce debt by $6.5B, which will drive leverage (currently at 1.5x) lower. In preferreds, we slightly reduced our allocation from approximately 18% to 14% of the portfolio as SRE 4.875% PFD were called. In high yield corporates, we increased our position from approximately 8% to 9% of the Strategy as we continued to add to a short duration ETF which had recently widened. As we have stated previously, this allocation allows us to be in a liquid, low beta vehicle at an attractive yield and spread. Our municipal allocation is approximately 2% as we have minimal exposure to a few closed end funds at this time. We added slightly to one municipal CEF as municipals are moderately attractive on the long end after lagging corporate spreads which have tightened dramatically this year. Our cash plus short term treasury allocation increased from approximately 7% to 11% of the portfolio. Our long-term treasury allocation remains at approximately 20% of the portfolio. One final note, in our Webinar (Replay here) from earlier this quarter, we highlighted that correlations between equities and fixed income seem to be normalizing to a more traditional relationship.
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.
