Quantitative analysis and fundamental research seeks to find higher yielding undervalued bonds within the municipal market. The investment process begins by applying total return scenario analysis using multiple interest rate assumptions over different time horizons to help select bonds with the most favorable total returns over multiple interest rate scenarios (i.e. movements). This method takes advantage of the inefficiencies within the municipal market through an investment process that combines diligent credit analysis of individual borrowers coupled with a thorough understanding of the major opportunities and risks within municipal sectors.
TAX EXEMPT PORTFOLIOS
TOTAL RETURN SCENARIO ANALYSIS
Individual bonds and portfolios of securities are quantitatively exposed to interest rate, yield curve, and credit spread movements or “shocks”.
Top-down review of core sectors is performed based on bottom-up analysis of individual credits to determine which municipal sectors should be over-weighted, neutral weighted, and underweighted.
NEW ISSUE CREDIT ANALYSIS
New bond offerings are evaluated to determine portfolio suitability based on fundamental credit research on each borrower and individual bond security features.
Holdings are analyzed on a systematic basis to monitor any changes in credit trend. Credit rating momentum is monitored for each borrower (bond).
We evaluate the core and unconventional fixed income universe. Asset classes include, but are not limited to, government securities, investment grade and high yield corporate bonds, floating rate senior loans, emerging market debt, mortgage-backed securities, and ultra-short duration securities. The process systematically evaluates relative strength, investment outlook, and relative valuation among asset classes to determine allocations that best capture market trends and near-term opportunities. This approach seeks to manage interest rate risk and credit exposure to arrive at optimal asset class allocations. The core framework is designed around seeking total return as a primary objective with preservation of capital as a secondary objective. Risk management is a critical component of the entire process and is embedded in both the fundamental credit analysis and portfolio construction.
Key elements of the investment process include the following:
- Relative Value Assessment
- Portfolio Diversification
- Risk Management & Monitoring
FUNDAMENTAL CREDIT ANALYSIS
- Consistency of Cash Flow Generation
- Collateral Assessment
- Management Quality
- Credit Agreement/Bond Indenture Review (legal analysis)
Investment advice offered through Level Four Capital Management, LLC, an SEC registered investment advisor. Level Four Capital Management, LLC provides investment management services to institutional and individual investors. Prior to October 2019, Level Four Capital Management, LLC conducted business as Level Four Asset Management, the asset management division of Level Four Advisory Services, LLC., an SEC registered investment advisor that provides investment management services to institutional and individual investors. Level Four Capital Management, LLC manages a variety of value and quantitative strategies.
Investing involves risk including loss of principal. The investment returns and principal value of the portfolio will fluctuate so that the value of an investor’s account, when redeemed, may be worth more or less than their original value. No strategy assures success or protects against loss.
All indices are unmanaged and may not be invested into directly.
Investors should consider the investment objectives, risks, charges and expenses of mutual funds and exchange traded funds carefully before investing. The prospectus and, if available, the summary prospectus contains this and other important information about the fund(s). You can obtain a prospectus and summary prospectus from your financial representative. Read carefully before investing.
ETFs are subject to market fluctuation and the risks of their underlying investments. ETFs are subject to management fees and other expenses. Unlike mutual funds, ETF shares are bought and sold at market price, which may be higher or lower than their NAV, and are not individually redeemed from the fund.
Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.