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February 2015

In February, the Barclays Municipal Bond Index fell 1.03 percent, while the Barclays 3-Year Municipal Bond Index fell 0.21 percent. The municipal market finally snapped its impressive monthly winning streak in February after posting positive results for 13 months in a row. ¬†Broadly speaking, fixed-income markets sold off in February as it appears the Federal Reserve is moving closer to raising interest rates and beginning the process of normalizing monetary policy. A synchronized global easing campaign from most of the world’s central banks and early signs of improvement in the global growth outlook were also factors pushing yields higher. On a global basis, U.S. fixed-income securities, including municipals, look very attractive, with some of the highest yields in the developed world. See complete fund performance here.

The employment report showed strong gains again in January with 257,000 nonfarm payrolls added in addition to positive revisions from November and December totaling 147,000 jobs. Other economic data pointed to mixed results, but overall it appears the economy remains on a steady growth path and a recession is very unlikely in the foreseeable future. With that in mind, the Fed continues to talk about normalizing interest rates as soon as mid-2015; this is primarily predicated on a relatively strong labor market and the positive momentum that we have experienced in recent months.

In specialty state trading, California and Puerto Rico outperformed, while New Jersey lagged. As a group, revenue bonds modestly underperformed general obligation credits. Within the revenue universe, education- and transportation-backed bonds underperformed. High-yield or “junk” bonds outperformed the broader muni market. Within the investment-grade universe, lower-quality outperformed, but return differentials were narrow. AAA-rated credits underperformed BBB-rated bonds by 46 basis points.

Past performance does not guarantee future results.

The Barclays Municipal Bond Index is an unmanaged index representative of the tax-exempt bond market. The Barclays 3-Year Municipal Bond Index is a total return benchmark designed for short-term municipal assets. The index includes bonds with a minimum credit rating BAA3, are issued as part of a deal of at least $50 million, have an amount outstanding of at least $5 million and have a maturity of 2 to 4 years.

Net Asset Value
as of 03/27/2015

Global Resources Fund PSPFX $5.84 -0.02 Gold and Precious Metals Fund USERX $5.39 -0.03 World Precious Minerals Fund UNWPX $4.53 -0.01 China Region Fund USCOX $8.32 0.05 Emerging Europe Fund EUROX $6.15 -0.06 All American Equity Fund GBTFX $27.82 0.05 Holmes Macro Trends Fund MEGAX $20.80 0.15 Near-Term Tax Free Fund NEARX $2.26 No Change China Region Fund USCOX $8.32 0.05