During April, the Bramshill Income Performance Strategy returned +0.55%, bringing YTD performance to +0.21%.
The Strategy generated steady results as market conditions remained supportive for high-quality income assets and selective credit exposure. With interest rates broadly range-bound and credit markets constructive, portfolio activity focused on deploying liquidity into attractively yielding opportunities while maintaining a disciplined risk posture. Consistent with our ongoing view that economic growth and recent inflation pressures will moderate in the future as the lagged effects of higher energy prices cause weakening demand, the Strategy continued to emphasize duration exposure and high-quality income sectors. Longer-term yields remain compelling relative to historical levels, reinforcing our preference for rate exposure over incremental spread risk. Against this backdrop, portfolio adjustments were incremental and opportunistic, reflecting improved entry points across select preferred, investment grade, and short-duration high yield exposures. We slightly increased our investment grade corporate allocation to 50%. This remains the largest allocation in the Strategy and a core driver of portfolio behavior. We made a notable addition to a best-of-breed, high-quality BDC debt issue. To be clear, our Strategy does not buy BDC equity and we have been cautious on leveraged loans. However, certain BDC debt is attractive at current levels due to their manageable asset coverage ratios, and limitations on leverage. This position yields approximately 6.20% for a 5 year maturity, which is extremely attractive for IG rated paper and trades wide to the BB-HY index. We also increased exposure to our existing holdings in a Duke Energy low dollar priced, long duration bond and Phillips 66 (PSX) 6.20% non-call 10y junior subordinated debt. One holding in a short-dated Wells Fargo bond matured during the month, partially offsetting new purchases. Within the preferred asset class, we increased our allocation slightly to approximately 13% of the portfolio as we purchased Schwab 6.10% PFD via the primary market. We also increased exposure to BK 7.116% PFD. These additions were partially funded by trimming exposure in AGNC and NLY frn PFDs. We increased our high yield corporate exposure from approximately 5% to 7% of the Strategy through the addition of SJNK short-duration ETF, reflecting an opportunity to capture attractive yield while limiting spread duration and liquidity risk. Overall high yield positioning remains intentionally modest and focused on capital preservation. Our long US treasury exposure remained stable at approximately 20% of the portfolio, continuing to serve as the primary source of duration exposure and portfolio ballast amid evolving macro conditions. Our municipal bond allocation was unchanged at 1% of the portfolio, with existing closed-end fund positions maintained as valuations remain broadly stable. Cash plus short-term treasury balances were intentionally reduced from approximately 8% to 5% as liquidity was deployed into higher-conviction opportunities, while maintaining ample liquidity and flexibility. With equity–bond correlations continuing to normalize, we believe allocations to long-duration, high-quality fixed income can remain both a return contributor and an effective portfolio stabilizer, while selective credit exposure provides incremental income within a risk-aware framework.
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.
