Second Quarter 2019

The Near-Term Tax Free Fund had a total return of 0.32 percent in the second quarter of 2019, underperforming its benchmark, the Bloomberg Barclays Municipal Bond 3 Year Index, which returned 1.11 percent. See complete fund performance here.

The main source of underperformance came from being underweight in the three- to five-year maturity range, as this area of the curve had strong performance.

Past performance does not guarantee future results. Current performance may be higher or lower than the performance data quoted. The principal value and investment return of an investment will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost.

Strengths

  • The fund’s allocations to longer-term maturities were a positive contributor to performance, as yields generally dropped during the quarter.
  • The fund’s allocation to Colorado bonds contributed positively to performance, as they outperformed the benchmark and carried a higher weighting.
  • The fund’s allocation to school district bonds contributed positively to performance, as they outperformed the benchmark and carried a higher weighting.

Weaknesses

  • The fund’s underweight in the three- to five-year maturity range contributed to underperformance, as this area of the curve performed well. The underweight was a result of the fund’s barbell strategy, which overweight’s short and long maturities while underweighting medium-term maturities. 
  • The fund’s allocation to Connecticut bonds contributed negatively to performance, as they underperformed the benchmark.
  • The fund’s allocation to utilities bonds contributed negatively to performance, as they underperformed the benchmark and carried a higher weighting.

Outlook

The Federal Reserve has signaled there could be a series of rate cuts in coming months as it moves to extend the current economic expansion amidst recent signs of slowing growth. Interest rates have been moving lower and may have room to fall further, given low inflation expectations and negative yields in many foreign countries.

Seven states (Massachusetts, New Hampshire, North Carolina, Ohio, Oregon, Rhode Island and Wisconsin) started the 2020 fiscal year on July 1 without a budget. Moody’s described late budget enactment as a sign of governance weakness which, if continued to the extreme, could result in downgrades. Several of the budget battles revolve around debates concerning environmental spending, social policy priorities and educational funding.

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 09/19/2019

Global Resources Fund PSPFX $4.46 0.01 Gold and Precious Metals Fund USERX $8.78 0.16 World Precious Minerals Fund UNWPX $3.22 0.03 China Region Fund USCOX $8.51 -0.05 Emerging Europe Fund EUROX $7.08 -0.03 All American Equity Fund GBTFX $24.95 0.05 Holmes Macro Trends Fund MEGAX $17.04 -0.07 Near-Term Tax Free Fund NEARX $2.22 0.01 U.S. Government Securities Ultra-Short Bond Fund UGSDX $2.00 No Change