Municipal Income Strategy

The goal of our Municipal Quality Core Fixed Income strategy is to outperform the Bloomberg AA Muni benchmark over a full market cycle. The strategy focuses on generating consistent federally tax-free income, which can help investors meet income goals and diversify portfolio risks. We seek a high batting average of success without incurring unnecessary risks in the portfolio or making bets. Over time, we expect to deliver excess returns with comparable overall volatility to the market, and greater downside risk protection during difficult market periods.

Strategy Overview

The strategy focuses on federally tax-free, investment-grade municipal bonds with no security level maturity limitations. Our primary objective is to outperform the market with comparable volatility by utilizing our proprietary and unique Quality Yield approach and the deep experience and continuity of our investment team.

The strategy maintains a preference for states with sound financials and demographics that offer spread to the municipal yield curve, avoiding states with elevated debt levels and/or in fundamental decline. Some income may be subject to state and local taxes.

Investment Philosophy

Johnson believes that bonds should behave like bonds, especially during periods of economic and market stress. We also believe that the consistent compounding of income drives returns in the bond market. As a result, our strategy employs our proprietary Quality Yield approach with fundamental credit research serving as the foundation of the investment process.

Portfolio Overview

The cornerstone of our approach is to maintain a core portfolio of high-coupon, stable-revenue bonds with a focus on building laddered portfolios, emphasizing curve-roll positioning, to reduce volatility and support a sustainable yield advantage over the benchmark. Investment decisions are made with respect to sector allocation, yield curve positioning, security structure, and issue selection that capture the relative value of the bond market for client portfolios.

Investment Guidelines

  • Benchmark: Bloomberg Municipal AA Index
  • 100% federally tax-exempt securities
  • High-quality focus on primarily A+ or better rated issuers
  • Customizable by state
  • Duration between 80% - 120% of benchmark (105% normal)
  • Diversification by sector, issuer and maturity
  • Generally avoid: stadium, airport, project–specific IDRs, tobacco, and AMT bonds
  • No derivatives, no junk, no foreign currency exposure
  • No interest rate speculation
Emilia Connor-Brady
Meet the Portfolio Manager

Emilia J. Connor-Brady, CFA, CAIA

Emilia joined Johnson Asset Management in 2018 and is a Portfolio Manager. Prior to joining the Johnson team, she worked at Fund Evaluation Group as a Fixed Income and Diversifying Strategies Analyst intern. Prior to that position, Emilia was a Business Process Analyst intern at the Business Backer. She received her Bachelor’s degree in Finance from the University of Cincinnati in 2018, and her Master’s of Science degree in Finance with S.T.E.M. designation from the University of Cincinnati in 2019. Emilia holds the Chartered Financial Analyst® (CFA®) and Chartered Alternative Investment Analyst (CAIA) designations.

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Fixed Income

We implement our proprietary Quality Yield investment approach across our suite of duration mandates with the objective of outperforming the market while maintaining a focus on downside risk management and comparable volatility.

Equity

Johnson Asset Management offers both enhanced return index capabilities and active equity solutions. We implement a repeatable and disciplined process that seeks to optimize return per unit of risk.

Mutual Funds

Johnson Asset Management’s Fixed Income and Equity solutions are accessible through our competitively priced mutual funds, which we have been providing institutional clients since 2000.

Disclaimer:

Important Information

Johnson Asset Management ("JAM") is a division of Johnson Investment Counsel, Inc. ("JIC"), an SEC-registered investment adviser. Registration does not imply a certain level of skill or training.

This information is provided for informational purposes only and should not be construed as investment advice or a recommendation to buy or sell any security. Any investment decision should be made based on an investor's individual objectives, financial circumstances, and risk tolerance.

All investments involve risk, including the possible loss of principal. Past performance does not guarantee future results.

Portfolio holdings, characteristics, allocations, and investment guidelines are subject to change without notice and may differ for individual client accounts.

For additional information regarding the strategy, including investment objectives, risks, fees, benchmark information, performance disclosures, and composite-related information, please refer to the applicable strategy fact sheet and commentary.