In the latter half of the quarter, we increased the Funds duration from its neutral position to capitalize on higher rates. We also added holdings in the 10-year range and reduced the Funds cash position. Demand for New York-domiciled issues was strong to start the year, and we took advantage of this by selling some of our New York-issued holdings into the demand.
Volatility remains higher than normal in the municipal market, providing opportunities to capitalize on bonds that offer attractive relative value. Expecting that new-issue supply will likely increase, we may use the second quarter as an opportunity to position the Fund for a potentially positive technical summer period for the municipal bond market.
If you are an investor who favors current income exempt from regular federal income tax, this Fund may be ideal for you. It is particularly well suited for income-oriented investors in higher tax brackets willing to assume some risk. Income from the Fund may be subject to federal alternative minimum tax (AMT), state and local taxes.
- Maintain a dollar-weighted average maturity range, under normal circumstances, between 10 and 30 years. This segment of the municipal market, while potentially more volatile, also may provide higher yields than shorter-term securities.
- Invest in high-quality securities, primarily investment-grade debt.
- Select investments on the basis of their relative value with a focus on total return.