Breckinridge Capital Advisors Hosts Taxable Municipal Bond Webinar for Institutional Investors.--Importance of Diversifying Portfolios with Build America Bonds and How to Manage a Standalone Allocation to Taxable Municipal Bonds-- BOSTON -- Breckinridge Capital Advisors, Inc., a Boston-based fixed income manager, hosted a 60-minute interactive webcast on Nov. 5 on the taxable municipal bond Taxable municipal bond Taxed private-purpose bonds issued by the state or local government to finance prohibited projects such as sports stadiums. taxable municipal bond market, which attracted more than 300 registrants. The webcast was entitled "Diversifying Your Portfolio with an Allocation to Build America Bonds (BABs) and Other Taxable Municipal Bonds". Featured presenters were Kemp Lewis, a managing director at Morgan Keegan, and Peter Coffin, president of Breckinridge Capital. Financial journalist Anuj Gangahar moderated the event. Registrants included investment consultants, pension funds, registered investment advisors Registered Investment Advisor (RIA) is a designation obtainable in the United States by an individual who has registered with the U.S. Securities and Exchange Commission or state regulatory agency (where the primary business is situated or multiple States in some cases) in , and endowment and foundation professionals. The audience posed more than 50 questions during the Q&A period, on issues such as municipal bond credit quality, market liquidity, the cost of the BAB program and the likelihood of its extension. The full webcast is available for replay on the Breckinridge Capital website at www.bondinvestor.com. Overview of Webinar Content The webinar presentation addressed the importance of the BAB program to the municipal bond market, the appeal of BABs to institutional investors and the approach for managing a standalone allocation to taxable municipal bonds. Importance of BABs to the municipal market Created as part of the American Recovery and Reinvestment Reinvestment Using dividends, interest and capital gains earned in an investment or mutual fund to purchase additional shares or units, rather than receiving the distributions in cash. 1. In terms of stocks, it is the reinvestment of dividends to purchase additional shares. Act of 2009, the BAB program provides municipalities with the option of issuing taxable bonds-instead of tax-exempt bonds-and receiving a 35 percent interest subsidy Interest subsidy The value of a firm's deduction of the interest payments on its debt from its earnings before calculation of its tax bill under current tax law. . "BABs have broadened the sources of demand for municipal bonds to include institutional investors such as endowments, pension funds and insurance companies that often have a strong appetite for long-term taxable bonds," said Lewis. According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. Coffin, the cost to the federal government of the BAB program should be roughly equivalent to or just slightly more than the "cost" of forgoing tax revenue on tax-free municipal bonds because the BAB subsidy will likely be recouped through incremental tax revenue. Appeal to institutional investors Taxable municipal bonds appeal to institutional investors because of their low credit risk and attractive returns relative to similarly rated corporate bonds. "Municipal defaults are extremely rare due to the taxing power of the municipality MUNICIPALITY. The body of officers, taken collectively, belonging to a city, who are appointed to manage its affairs and defend its interests. and their role in providing essential services. Most municipalities have very manageable debt levels," said Coffin. Examples cited in the webinar of recent high quality, taxable-municipal bonds with attractive yields include issues from Columbus, OH and Clayton County Clayton County is the name of two counties in the United States:
Managing a standalone allocation of taxable municipals Due to the large number of municipal bond issues, the lack of a central exchange and infrequent trading in the secondary market, a unique investment approach is needed to effectively manage a taxable municipal allocation. "There are nearly 65,000 different municipal bond issues; 20 times the number in the corporate bond market. The most attractive opportunities in terms of credit quality and yield are often found in new issues from lesser known municipalities or in opportunistic trading in secondary market," explained Coffin. An investment advisor Investment Advisor 1. A person making investment recommendations in return for a flat fee or percentage of assets managed, known as a commission. 2. For mutual fund companies, it is the individual who has the day-to-day responsibility of investing and monitoring the cash and specializing in municipal bonds and having a broad dealer network can provide access to the full range of market activity. Additionally, ongoing credit research and attentive monitoring can provide greater insight and access to short-lived opportunities in the secondary market. About Breckinridge Capital Advisors, Inc. Breckinridge Capital Advisors, Inc. is a Boston-based Registered Investment Advisor specializing in the management of customized tax-exempt and taxable fixed-income portfolios, with a primary focus on municipal bonds. With over $11 billion in assets under management Assets Under Management (AUM) is a term used by financial services companies in the mutual fund and money management or investment management business to gauge how much money they are managing. and a deeply experienced investment team, the firm understands the value of fundamental credit analysis, opportunistic trading and, most importantly Adv. 1. most importantly - above and beyond all other consideration; "above all, you must be independent" above all, most especially , the preservation of capital Preservation of Capital An investment strategy whose primary goal is to prevent the loss of an investment's total value. Notes: For investors using the capital preservation strategy to achieve their goal, they must ensure their portfolio is producing a return that is at . Breckinridge's mission is to provide investors with fixed-income portfolio management that combines institutional strategies and rigor rigor /rig·or/ (rig´er) [L.] chill; rigidity. rigor mor´tis the stiffening of a dead body accompanying depletion of adenosine triphosphate in the muscle fibers. with a common-sense investment approach, with the goal of generating strong risk-adjusted returns over time. For contact information please visit www.bondinvestor.com. |
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