What are some of the drivers for municipal investors?
We’ve existed in an atypical marketplace for the last several years, one in which rates have been kept artificially low for an abnormal period of time. So really it’s been a story about getting exposure to the right segments in the market.
How has your team done in the current environment?
We’ve been doing pretty well. Our strategy plays nicely into the strengths of the marketplace, so we tend to be overweight both credit and curve, and those are the two segments in the marketplace that are really working.
What happened during 1Q16?
We head into 2016 with really a challenging environment. The Fed had just raised rates in December and I think the expectations were for additional rate hikes and what we’ve seen is due to a combination of macroeconomic and geopolitical events we could be in for another year of lower for longer. So, despite that challenging beginning we’ve seen a solid performance here for the municipal asset class in the first quarter.
What’s next for 2Q?
What’s driving the market for the back half of ’15 and into the first quarter of ’16 is a very strong positive technical that exists in the marketplace today. We are seeing very good flow into the marketplace, and we’re seeing our supply picture down slightly from last year, so there is a good positive supply/demand technical in the marketplace against the backdrop of lower rates.
The views expressed represent the Managers’ assessment of the market environment as of April 2016 and should not be considered a recommendation to buy, hold, or sell any security, and should not be relied on as research or investment advice.
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