The Tax-Advantaged Ultra-Short Fixed Income Fund posted a 0.35% return for the first quarter, compared with 0.25% for the blended benchmark. The Funds one-year return was 1.08%, versus 0.61% for the benchmark.
Our primary strategy during the period was to purchase two- and three-year fixed-rate securities. We also participated in the tax-free municipal floating-rate note, or FRN, market, whose securities generally feature a coupon that resets above the one-week municipal index. Holding FRNs allows the Fund to collect a competitive tax-free coupon, with a minimal price decline should market rates rise. We continue to examine tax-free municipal bonds for purchase though taxable bonds are also considered after accounting for federal taxes at the highest bracket. The Funds duration positioning continues to be modestly long versus our one-year neutral target, as we anticipate the continuance of the Feds "lower-for-longer" easing policy.
If you're seeking an investment that may generate higher yields than money market funds with less volatility than short duration bond funds, this Fund may be appropriate for you. The Fund, which has a $250,000 initial investment minimum, is intended for investors with an investment horizon of at least one year who are seeking to move a portion of their money market fund assets.
The Fund is not a money market fund, which maintains a $1.00 NAV, and the Fund's share price will fluctuate with its returns.
- Seek to provide investors in higher tax brackets more after-tax yield than a money market fund with potential for capital appreciation.
- Strive to maximize after-tax return by pursuing best net after-tax yield and total return opportunities in both taxable and tax-exempt securities.
- Strive to maintain a 6-18 month average maturity, under normal circumstances, with a maximum security maturity of three years. Also manage Fund in an effort to have an average portfolio quality of A or better, with all securities to be investment grade.