Tax-Exempt Investment Strategies
Stifel Capital Management’s Tax-Exempt strategies focus on municipal bonds, where we serve as advisor and manager to provide customized portfolios for individuals, trusts and estates through our Separately Managed Account Program.
Our business model is based on the belief that a “one size fits all” approach is not optimal for fixed income investments. We construct individually tailored portfolios with the goal of satisfying varying client goals and income needs. An experienced team of investment professionals provides institutional quality portfolio management for municipal separately managed accounts by employing disciplined credit research and active management for each portfolio.
Income from particular municipal bond issues may or may not be subject to state and alternative minimum taxes. Capital gains tax may apply if sold prior to maturity.
The strategy seeks to provide a high degree of liquidity and preservation of principal by investing in a diversified portfolio of variable rate demand notes (VRDNs). These securities offer short‑term, tax‑exempt exposure with interest rates that typically reset daily or weekly. The strategy aims to generate yields that may be higher than traditional tax‑exempt money market levels, while offering a defensive position in periods of rising short‑term rates.
VRDNs held in the strategy feature a one‑day or seven‑day demand (put) option, allowing investors to tender the securities at face value. These tender rights are supported by third‑party credit and liquidity facilities, such as letters of credit and standby bond purchase agreements issued by highly rated U.S. banks.
While VRDNs are designed to provide strong liquidity characteristics, investors should be aware of related risks. Liquidity depends on the ability of the remarketing agent to reset rates and facilitate tenders, as well as the financial strength of the liquidity provider. In periods of market stress, remarketing may be less effective, and investors could rely more heavily on the liquidity facility.
Overall, this strategy seeks to balance liquidity, credit quality, and yield potential by investing in VRDNs backed by strong structural features, while acknowledging the associated credit, liquidity, and interest‑rate risks inherent in the short‑term municipal market.
Diversification does not ensure a profit or protect against loss.
For more information, contact:
Michael J. Smith, Chief Investment Officer, Tax-Exempt Fixed Income
(609) 297-1144 | [email protected]
Our business model is based on the belief that a “one size fits all” approach is not optimal for fixed income investments. We construct individually tailored portfolios with the goal of satisfying varying client goals and income needs. An experienced team of investment professionals provides institutional quality portfolio management for municipal separately managed accounts by employing disciplined credit research and active management for each portfolio.
Income from particular municipal bond issues may or may not be subject to state and alternative minimum taxes. Capital gains tax may apply if sold prior to maturity.
Municipal Cash Management
The strategy seeks to provide a high degree of liquidity and preservation of principal by investing in a diversified portfolio of variable rate demand notes (VRDNs). These securities offer short‑term, tax‑exempt exposure with interest rates that typically reset daily or weekly. The strategy aims to generate yields that may be higher than traditional tax‑exempt money market levels, while offering a defensive position in periods of rising short‑term rates.VRDNs held in the strategy feature a one‑day or seven‑day demand (put) option, allowing investors to tender the securities at face value. These tender rights are supported by third‑party credit and liquidity facilities, such as letters of credit and standby bond purchase agreements issued by highly rated U.S. banks.
While VRDNs are designed to provide strong liquidity characteristics, investors should be aware of related risks. Liquidity depends on the ability of the remarketing agent to reset rates and facilitate tenders, as well as the financial strength of the liquidity provider. In periods of market stress, remarketing may be less effective, and investors could rely more heavily on the liquidity facility.
Overall, this strategy seeks to balance liquidity, credit quality, and yield potential by investing in VRDNs backed by strong structural features, while acknowledging the associated credit, liquidity, and interest‑rate risks inherent in the short‑term municipal market.
Municipal Intermediate
This strategy offers a diversified portfolio of investment grade municipal debt securities with an average maturity range of 6 to 12 years and an average duration of 4 to 7 years. The strategy invests in bonds of investment grade credit rating and higher and does not utilize bonds that are subject to the Alternative Minimum Tax (AMT). Clients may choose state-specific portfolios. This strategy focuses on maximizing tax-exempt income and lowering interest rate volatility.Municipal Opportunities Plus
This strategy offers a diversified portfolio of municipal debt securities with an average maturity range of 1 to 30 years and an average duration of 1 to 15 years. This investment strategy seeks total return by taking an opportunistic approach to the municipal market. The municipal sector is inefficient and there is dislocation in security pricing. We believe this is an opportunity for clients to employ credit analysis with experienced portfolio management to find undervalued securities. Securities selected for this portfolio can include investment grade, non-investment grade and non-rated municipal issues. Active yield curve positioning is also a component of the strategy. The manager may select taxable or tax-exempt municipal securities in seeking total return opportunities. In addition, this portfolio will be highly flexible and can be structured to a risk profile of investment grade only, with a maximum maturity of 20 years and a duration limit of 10 years. The manager intends to employ an active approach to maximizing total return.Diversification does not ensure a profit or protect against loss.
For more information, contact:
Michael J. Smith, Chief Investment Officer, Tax-Exempt Fixed Income
(609) 297-1144 | [email protected]