Beacon Capital Management Advisors (BCM) works with an independent, fee-based investment management company that focuses exclusively on the management of municipal bond portfolios for our affluent, high-net-worth clients desiring tax free income. The investment management company is a separate entity that is not owned by BCM. The investment management company serves as the portfolio manager for BCM’s municipal bond clients.
The unique benefit to BCM’s clients of working with the municipal bond portfolio manager is individual investors can receive the same level of portfolio management and services previously reserved only for large institutions. The manager has extensive experience in portfolio management, trading, and credit analysis. Each client’s portfolio is created and managed according to your specific needs and investment objectives.
The manager employs a tax-efficient, conservative style of portfolio management investing in appropriately structured, highly liquid investment grade credits. The process starts with a review of the financial objectives and risk profile of each client. This allows the manger to develop target parameters such as duration, sector and quality guidelines to be used in the creation of each client’s separately managed portfolio.** There is a $100,000 minimum initial investment in order for an investor to qualify for this program.
What are the benefits for BCM’s municipal bond clients?
- A customized municipal bond portfolio to meet your specific needs.
- Potentially higher yield due to potentially lower fees than municipal bond mutual funds or if individual bonds were purchased through brokerage firms.
- Individual investors can receive the same level of portfolio management and services traditionally reserved only for large institutions.
Below is an outline of how the portfolio manager creates and manages custom portfolios tailored to meet your specific financial objectives, risk profile, and time horizon.
The portfolio manager utilizes a macro-economic framework as an initial step in the process of structuring and managing portfolios. The manager’s outlook, combined with current market conditions, drives decisions such as sector emphasis and structuring along the yield curve. The client’s individual profile, financial objectives, and any agreed-upon benchmarks further drive portfolio structure. Representative structure elements include:
- Maturity/duration/option-adjusted duration.
- Call features/convexity.
- Portfolio strategies include laddered, barbell, intermediate and long term actively managed portfolios.
- Immunization, as appropriate.
- Benchmark-driven characteristics.
Within the above framework, the manager’s orientation is one of “relative value.” Here are the steps the manager uses to create your portfolio:
- Carefully considered selection of industry sectors and individual securities. In-house research, as well as credit and strategy research from Wall Street sources is utilized. The portfolio manager does not compromise credit quality in the pursuit of financial returns. The portfolio manager invests in appropriately structured, highly liquid investment grade credits.
- Swapping out of sectors or bonds that have outperformed the market and reinvesting in undervalued securities/sectors.
- The team considers a client’s entire investment portfolio and tax needs in taking losses and gains. Communication with clients’ other managers is encouraged to allow for profit and loss allocations to be managed across asset classes to achieve maximum after-tax returns.
- The portfolio manager actively monitors and can arbitrage the relationship between the taxable and tax-exempt markets
- In the municipal market, losses are valuable. Consistent with client guidelines, the portfolio manager favors taking losses using tax-loss swaps as market conditions permit throughout the year, not just at year end.
- Losses can be coordinated to offset gains in other client asset classes.
- Portfolios are generally managed to minimize capital gains.
Portfolios are managed in a conservative style that emphasizes monitoring and controlling of risk. Developments that can trigger sales include:
- Deterioration of credit quality
- Overvalued sector.
- Maturity, duration no longer match objectives.
- Tax swap programs.
Risk Control Management**
The portfolio manager’s conservative style emphasizes preservation of assets. In addition, they have access to credit and strategy research from independent third party providers. Risk control includes:
- Credit risk / ongoing monitoring of credits.
- Market risk / limit amount of exposure consistent with client objectives.
- Reinvestment risk addressed in structure.
This sounds interesting. Can Beacon Capital Management Advisors do a free review of my existing municipal bond portfolio or can a free hypothetical portfolio be created for me?
Yes. Contact us and we would be happy to.