Appleton Core Municipal Fixed Income

This approach is designed to create customized client portfolios that focus on preservation of capital, growth of principal, and competitive tax-free returns. By its nature, the Municipal market, with 1.4 million issues, various sources of revenues and cash flow, and a multitude of structural nuances, offers the active manager opportunities to add value in many ways. Appleton's team of seasoned market professionals focuses on the high investment grade universe (A and higher) and takes advantage of supply and demand imbalances, sector allocation, geographic dispersions, and individual security selection to enhance market returns. Appleton also dissects the yield curve, focusing on the intermediate area, to target appropriate interest rate-risk exposure. We believe that clients can exceed benchmark returns with lower interest rate risk and higher credit quality, as credit risk is not always appropriately priced into the markets. Appleton's active approach to management looks to capture value across the curve, capitalize on market inefficiencies, and adjust interest rate sensitivity to respond to a given rate cycle.

Portfolio Objective:

Preservation and growth of capital in a tax efficient manner with disciplined management of liquidity risk, interest rate risk, and credit risk.

Investment Guidelines:

  • ELIGIBLE INVESTMENTS: General obligations and revenue bonds of state and local governments of the United States and United States Territories
  • WEIGHTED AVERAGE DURATION TARGET: 5.0 to 6.0 Years - can be adjusted shorter or longer by 1.0 year
  • AVERAGE CREDIT QUALITY: Average Aa1 or better, less than 5.0% below A
  • LIQUIDITY: Position sizes reflect round lot execution and ability to efficiently access market execution
  • DIVERSIFICATION: National portfolios with target of 40% to 60% of in-state bonds for clients residing in high tax states
  • ISSUER GUIDELINES: 5.0% position and maximum of 15.0% per issuer at the time of purchase
  • TRADING: Conducted with “best execution” at the time of the trade to minimize transaction cost and maximize potential return
  • TAX POLICY: Transactions executed with consideration of client's tax consequences. No AMT bonds purchased for client accounts.
  • BENCHMARK: Lehman Brothers 5-7-10 Yr Municipal Blend

These are investment guidelines that we follow at time of purchase, according to market conditions. In the case of transferred securities, Appleton will restructure on a best efforts basis as market conditions permit. Appleton Partners custom designs fixed income portfolios to meet individual client needs.

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