Tax-Exempt Fixed Income

The investment objective of AMI’s tax-exempt fixed income product is to provide an investment vehicle for taxable individuals and corporations which will achieve superior after-tax returns compared to traditional investment grade portfolios having an intermediate maturity focus. This product is suitable for investors looking for high after-tax income relative to other high quality debt securities, and who desire portfolio diversification, especially with respect to other income producing investments.

 

Overview

  • We utilize a top down approach to determine the appropriate portfolio structure within the current economic cycle (ladder versus barbell, short versus intermediate, callable versus bullet).  We then use a bottom up process to select the appropriate securities for each portfolio.
  • We attempt to identify high quality, tax-exempt bonds of municipal issuers with favorable credit characteristics and the potential for rating upgrades and/or underlying financial improvements which are not fully reflected in current market prices.
  • We closely examine the pledge backing each bond, the issuer’s debt load, tax-rates, tax-base, demographics, and the rationale of each issue along with the use of proceeds.
  • We prefer issues that are essential services and which have a secondary source of revenue that provides additional downside protection to bondholders.  Examples would include toll bridges, water and power, sanitation and special tax issues.
  • Every portfolio is customized to meet the specific needs of each individual investor.  Considerations include such factors as current asset allocation, state of residency, investment time horizon, cash flow needs, and anticipated marginal tax bracket.

 

 

Click on each chart below to see a larger version.

 

 

 

 

TOP TEN HOLDINGS*

1.

California St.

5.000% Due 10-01-29

2.22%

2.

Tracy Calif. Cmnty. Dev. Agy. Succ.

5.000% Due 08-01-31

1.76%

3.

Southeast Res. Recovery Facs. Auth. Calif. Lease Rev.

5.250% Due 12-01-18

1.48%

4.

Sacramento Calif. City Uni. Sch.

5.000% Due 07-01-30

1.36%

5.

Placentia-Yorba Linda Calif. Un.

5.000% Due 10-01-29

1.36%

6.

El Dorado CA IRR Dist. CTFS Partn Ref.

1.36%

7.

California St. For Previous Iss.

5.000% Due 08-01-27

1.35%

8.

Natomas Uni. Sch. Dist. Calif.

5.000% Due 08-01-26

1.35%

9.

Abag Fin. Auth. For Nonprofit Co.

5.000% Due 09-02-29

1.33%

10.

Kern California Cmnty. College Dist.

5.250% Due 11-01-31

1.23%

*As of 6/30/18. Holdings are subject to change.  The securities identified and described above do not represent all of the securities purchased, sold or recommended for client accounts. The reader should not assume that an investment in the securities identified was or will be profitable.  A complete list of all buy and sell recommendations for this strategy within the last 12 months is available upon request.  AMI Asset and/or one or more of its employee may have a position in these securities and may purchase and sell such securities from time to time.

 

 

AMI 2nd Quarter 2018 Tax-Exempt Factsheet

 

 


* as of 6/30/2018