Our municipal bond strategy is intended to outperform the respective benchmark in a consistent,
lower risk manner. To achieve this objective we limit our dependence on the forecasting of interest
rates. Instead, we seek to control the risk-return profile of the portfolio relative to the predetermined
benchmark by maintaining a relatively duration neutral posture. We employ an active value-added approach
wherein we monitor and analyze a wide range of market data. This analysis enables us to determine
portfolio weightings among the various municipal bond sectors. In addition, we examine the findings
of our internal research analysts in order to focus attention on these sectors and the different
quality tiers among those securities. Depending on our economic outlook, we may employ a ladder,
barbell, or bullet posture to the portfolio to take advantage of potential yield curve shifts.
Finally, we rely on the experience and trading expertise of our portfolio managers in order to
select the most attractive securities within a sector.
It is important to note that tax considerations represent an essential component of our investment decision process. Gains tax implications are included in our relative value analysis when we evaluate investment alternatives, and loss harvesting transactions play an integral role.
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