February 2018 Monthly Review – The MainLine Advantage Quantified
In 2018, munis continue to be weighed down by higher taxable rates and by a lack of new issuance which, paradoxically, creates a listless environment. However, they are one of the top performing fixed-income investments year-to-date, but have yet to show the price leadership we felt they would in 2018. It looks like it could stay this way in the near-term.
As a MainLine West investor, you have been purchasing bonds as efficiently as you can, in most cases, receiving the original offering price. This is providing you a much higher yield than most muni investors, according to a recent study. Fideres Partners LLP reviewed new issue pricing in various fixed income markets and, in doing so, has helped us quantify the “MainLine Advantage”. For a $10 million portfolio, this study would suggest our investors are earning $163,000 more per year in income than the average muni investor.
Muni Market Review
We are still waiting for the muni market to get started in 2018. February market highlights are as follows:
- Muni yields increase from 11 to 15 bps with
the curve staying unchanged.
- Taxable rates were up 14 to 16 bps and no
change in the curve.
- Issuance is down 38% versus year-to-date
2017. New money issuance is virtually unchanged year over year, but refunding is down 74%.
- Muni to taxable ratios are showing munis to be at their richest level in some time.
Read the full Monthly Review here.