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August 2015

The Barclays Municipal 3-Year Bond Index gained 0.11 percent percent during the month of August. See complete fund performance here. 

Concerns over global growth, China and the potential for a Federal Reserve rate hike made for a volatile August for financial markets. Municipals were able to outperform weaker U.S. Treasuries, thanks in part to positive seasonal factors such as net-negative supply and the defensive nature of the asset class in what ended up being an environment of intense risk aversion. Muni supply and demand remains fairly well balanced. Outflows have dissipated somewhat, and issuance continues at a seasonally appropriate pace, offering enough variety in structure and credit quality to attract diverse buyers. In all, August issuance was $30.8 billion, up 26 percent year-over-year and 14 percent above the five-year average. Outflows totaled $780 million but were based less on muni market fundamentals and more on broader market influences. Puerto Rico and its restructuring plan will remain a focus, though significant contagion is not expected, given that the situation has been well telegraphed for some time.

Two recent events—Puerto Rico defaulting on its appropriation debt and Illinois failing to appropriate for Metropolitan Pier bonds—have some questioning the security of tax-backed,  appropriated debt, typically rated just one notch below general obligation bonds.

Given the fund’s greater exposure to shorter maturities, exposure to the shorter-end of the yield curve boosted performance as the one-to-three year portion of the curve outperformed the three-to-five year portion. Revenue bonds, to which the fund has a higher exposure, outperformed general obligation bonds, helping performance as well.

Past performance does not guarantee future results.

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 10/01/2015

Global Resources Fund PSPFX $4.64 0.03 Gold and Precious Metals Fund USERX $4.71 -0.09 World Precious Minerals Fund UNWPX $3.83 -0.08 China Region Fund USCOX $7.27 0.01 Emerging Europe Fund EUROX $5.37 -0.02 All American Equity Fund GBTFX $25.91 0.02 Holmes Macro Trends Fund MEGAX $19.35 0.09 Near-Term Tax Free Fund NEARX $2.25 No Change U.S. Government Securities Ultra-Short Bond Fund UGSDX $2.01 No Change