First Quarter 2020

The Near-Term Tax Free Fund had a total return of 0.31 percent in the first quarter of 2020, outperforming its benchmark, the Bloomberg Barclays Municipal Bond 3 Year Index, which returned negative 0.37 percent. See complete fund performance here.

The main source of outperformance came from exposure to the 7-10 year maturity range, as the fund’s holdings in this area of the curve saw stronger relative performance during the quarter versus the benchmark’s shorter maturity holdings. This exposure was a result of the fund’s barbell strategy which overweights short- and long-term maturities while underweighting medium-term maturities.

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 maturities in the 7-10 year range were a positive contributor as performance was strong in that area of the curve.
  • The fund’s allocation to Texas 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 allocation to the 1-3 year maturity area of the curve was a detractor to fund performance.
  • The fund’s allocation to District of Columbia bonds contributed negatively to performance, as they underperformed the benchmark while carrying a higher weighting.
  • The fund’s lack of allocation to student loan bonds contributed negatively to performance, as the benchmark’s exposure had positive performance.

Outlook

The Federal Reserve announced it will lend as much as $500 billion to states and the biggest counties and cities, making its first direct move ever into the $3.9 trillion municipal-debt market to help limit the financial fallout of the coronavirus pandemic. The step will help governments cover the shortfalls they are facing because of the vast shutdowns sweeping over much of the country and prevent waves of short-term borrowing by localities to plug budget holes from potentially destabilizing the public markets. The move was broadly welcomed by Wall Street analysts, municipal bond investors, underwriters and lobbying groups, even though it fell short of buying already-issued debt as some had sought. Moreover, it’s only open to cities with a population above 1 million and counties with 2 million or more, limiting its direct effect on local governments to the 26 that are big enough to qualify, based on Census figures.

 

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 06/05/2020

Global Resources Fund PSPFX $4.10 0.04 Gold and Precious Metals Fund USERX $10.08 -0.12 World Precious Minerals Fund UNWPX $3.48 -0.03 China Region Fund USCOX $8.85 0.13 Emerging Europe Fund EUROX $5.97 0.12 All American Equity Fund GBTFX $22.58 0.31 Holmes Macro Trends Fund MEGAX $15.63 0.18 Near-Term Tax Free Fund NEARX $2.24 No Change U.S. Government Securities Ultra-Short Bond Fund UGSDX $2.00 No Change