Monthly Portfolio Commentary
In a Q&A with our research team, topics include the possibility of a double-dip recession and how we’ve positioned our portfolios to withstand shorter-term shocks that could drive markets lower while preserving the potential for long-term gains; how we arrive at earnings estimates for our various scenarios; the risk in municipal credit markets; our initial work on leveraged loans; and our opinion of U.S. high quality equities.

Research Reports

American Century Tax-Free Bond: Our recent conversation with American Century’s municipal bond team came as most states’ and municipalities’ summer budget battles were ending (46 states have fiscal years ending in June) but news about growing unfunded pension and health care liabilities were continuing to grab headlines. Our conversation focused on the funds’ current positioning as well as understanding the risks in various segments of the municipal bond market.

Longleaf Partners: Veteran manager Mason Hawkins has experienced numerous bear markets in his career, but he says the recent one is different because, “It resulted in industry leaders selling at less than half of appraisal.” He adds that the funds currently own the best businesses with the best management partners in the firm’s 35-year history.

Osterweis Strategic Income: We recently had a brief update call with Carl Kaufman, portfolio manager on the Strategic Income portfolio. As was the case in the first quarter, Kaufman remains concerned about a growing domestic budget deficit, the quality of holdings on the Federal Reserve’s balance sheet, and rising interest rates over time.

PIMCO Emerging Local Bond: PIMCO Emerging Local Bond (ELB) has 37% in Chinese and other Asian currencies, making the fund about 7% overweighted to the Asian region relative to its benchmark. His positive view on Asian currencies stems from a few factors...