Avoiding big losses is much more important to bond investors than scoring significant wins. “They’re in the market for principal preservation and tax-free income,” says Lyle Fitterer, who has been a municipal bond fund manager for over 30 years.
Fitterer, the co-lead manager of the $644.5 million Baird Strategic Municipal Bond fund (ticker: BSNSX), manages to both avoid losses and deliver wins, though his strategy might strike some as unconventional. The no-load fund’s largest position is five-year U.S. Treasury note futures, for example, and it holds a significant amount of high-yield issues.
The fund saw inflows during 2022’s bond rout when other muni bond funds saw outflows. That allowed Fitterer to add some higher-yielding bonds with slightly lower-quality credits, which has helped Strategic Muni outperform this year.
Barron’s
By Debbie Carlson
Updated Aug. 9, 2023