Resilience: The ability to withstand or adjust to challenges
All investments are subject to market risk, including possible loss of principal.
Municipal bond risks include the ability of the issuer to repay the obligation, the relative lack of information about certain issuers, and the possibility of future tax and legislative changes, which could affect the market for and value of municipal securities. Investing in below investment grade securities may carry a greater risk of nonpayment of interest or principal than higher-rated securities.
Diversification does not assure a profit or protect against loss in a declining market.
Active management is the use of a human element, such as a single manager, co-managers or a team of managers, to actively manage a fund’s portfolio. Active management strategies typically have higher fees than passive management.
Alpha measures a fund’s risk-adjusted performance and is expressed as an annualized percentage. Credit spread reflects the difference in yield between a treasury and corporate bond of the same maturity. Duration is a measure of the sensitivity of the price of a bond to a change in interest rates. Interest rate risk is the potential that a change in overall interest rates will reduce the value of a bond. is inversely related to the approximate percentage change in price for a given change in yield. Duration to Worst is the duration of a bond, computed using the bond’s nearest call date or maturity,Modified Duration whichever comes first. This measure ignores future cash flow fluctuations due to embedded optionality. Spread widening means that the difference between two bonds is increasing. Yield to worst is a measure of the lowest possible yield that can be received on a bond that fully operates within the terms of its contract without defaulting. The yield-to-worst metric is used to evaluate the worst-case scenario for yield at the earliest allowable retirement date.
Bloomberg Barclays Municipal Bond Index: A rules-based, market-value-weighted index engineered for the long-term tax-exempt bond market. To be included in the index, bonds must be rated investment-grade (Baa3/BBB- or higher) by at least two of the following ratings agencies: Moody’s, S&P, Fitch. If only two of the three agencies rate the security, the lower rating is used to determine index eligibility. If only one of the three agencies rates a security, the rating must be investment-grade. They must have an outstanding par value of at least $7 million and be issued as part of a transaction of at least $75 million. The bonds must be fixed rate, have a dated-date after December 31, 1990, and must be at least one year from their maturity date. Remarketed issues, taxable municipal bonds, bonds with floating rates, and derivatives, are excluded from the benchmark. The index has four main sectors: general obligation bonds, revenue bonds, insured bonds (including all insured bonds with a Aaa/AAA rating), and pre-refunded bonds. Most of the index has historical data to January 1980. In addition, sub-indices have been create based on maturity, state, sector, quality, and revenue source, with inception dates later than January 1980. Bloomberg Barclays Municipal High Yield Index: An unmanaged index of municipal bonds with the following characteristics: fixed coupon rate, credit rating of Ba1 or lower or non-rated using the middle rating of Moody’s, S&P, and Fitch, outstanding par value of at least $3 million, and issued as part of a transaction of at least $20 million. In addition, the bonds must have a dated-date after December 31, 1990 and must be at least one year from their maturity date. Bloomberg Barclays Municipal Bond Illinois Index is a sub-index of the Bloomberg Barclays Municipal Bond Index and represents Illinois municipal bonds. Bloomberg Barclays Municipal Bond New Jersey Index is a sub-index of the Bloomberg Barclays Municipal Bond Index and represents NJ municipal bonds. Bloomberg Barclays Municipal Bond Hospital Index is a sub-index of the Bloomberg Barclays Municipal Bond Index and represents hospital municipal bonds. Bloomberg Barclays Municipal Bond Transportation Index is a sub-index of the Bloomberg Barclays Municipal Bond Index and represents transportation municipal bonds. Bloomberg Barclays Municipal Bond Airport Index is a sub-index of the Bloomberg Barclays Municipal Bond Index and represents airport municipal bonds. Bloomberg Barclays Taxable Municipal Index is a rules-based, market-value-weighted index engineered for the long-term taxable bond market. Bloomberg Barclays U.S. Treasury Index measures the public obligations of the US Treasury with a remaining maturity of one year or more. Must be a US Treasury security. Must have at least $300 million par amount outstanding. Must be rated investment-grade (Baa3/BBB- or higher) by at least two of the following ratings agencies: Moody’s, S&P, Fitch. Must be fixed rate. Must be dollar-denominated and non-convertible. Bloomberg Barclays U.S. Corporate Investment Grade Bond Index measures the investment grade, fixed-rate, taxable corporate bond market. It includes USD denominated securities publicly issued by US and non-US industrial, utility and financial issuers. Bloomberg Barclays Asset Backed Securities Index is a subset of the Barclays U.S. Aggregate Bond Index and tracks asset-backed securities with maturities of at least one year. Bloomberg Barclays U.S. MBS Index measures the performance of investment grade fixed-rate mortgage-backed pass-through securities of GNMA, FNMA, and FHLMC. ICE BofA U.S. Corporate Index: tracks the performance of U.S. dollar-denominated investment-grade corporate debt publicly issued in the U.S. domestic market.
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