April 12, 2024 — Sage answers the 4 big questions (outlook for macroeconomic growth, Fed policy, valuations, and investor sentiment) and illustrates our municipal fixed income positioning in the current environment.

Market Outlook

• Growth and inflation readings surprised to the upside on the quarter, which complicated the outlook for Fed policy. The most recent US labor market readings reinforced the notion that job growth continues to underpin the strong economic expansion and on balance, should result in more patience from the Fed in commencing rate cuts.
• Despite negative returns across most fixed income sectors, municipal indices outperformed many of their taxable peers. In general, municipal issuers remain strong from a credit perspective and are well positioned to manage the initial phases of any economic slowdown.
• Looking ahead, the second quarter is likely to be a better entry point for investors as tax-season selling pressure tends to coincide with a weaker technical environment until June.

April 12, 2024 — This presentation provides an overview of our market outlook and key themes, and it illustrates how Sage is positioned in the current environment.

Key Themes

• Seasonal Weakness Presents an Excellent Entry Point — Weaker technical factors during April and May should provide investors with a better entry point, especially since rates have recently risen.
• The Credit Environment is Fairly Solid — We continue to focus on select AAA and A credits and have a modest longer duration tilt to balance price upside and limited access to supply/bonds.
• Cracks Appear in Credit — Despite the continuation of a strong economy and solid fiscal picture, several larger issues are beginning to experience budgetary challenges.

March 8, 2024 — This presentation provides an overview of our market outlook and key themes, and it illustrates how Sage is positioned in the current environment.

February 12, 2024 — This presentation provides an overview of our market outlook and key themes, and it illustrates how Sage is positioned in the current environment.

Key Themes

• Technical Factors Should Remain Supportive — There are $95.4 billion in maturity and coupon payments expected in the first quarter with limited new issue supply.
• Credit Strength vs. Uncertain Rate Risk — Municipal issuers are well positioned to weather any economic slowdown, but rate volatility will be elevated as Treasury yields react to rapidly changing market factors.
• “De Minimis” Tax Effects — The little-known pricing/tax risk regarding municipal bonds has caused performance volatility and altered return expectations.

January 12, 2024 — Sage answers the 4 big questions (outlook for macroeconomic growth, Fed policy, valuations, and investor sentiment) and illustrates our municipal fixed income positioning in the current environment.

Market Outlook

• Yield levels, although off their recent highs, still represent an attractive entry point, especially if the economy continues to slow and Fed policy becomes more dovish. The municipal market provides a well-supported backdrop as credit quality remains stable and tax-exempt yield carry remains attractive.
• The coming shift to lower rates will drive price returns positive and benefit longer duration strategies the most. Credit challenges will inevitably develop; however, the initial phase of the slowdown will be relegated to the higher-beta/lower-rated municipal sectors.
• Sage’s barbell allocation will benefit when the inverted 2s5s curve experiences a bull-steepening. We remain committed to our strategic overweight to single A credits, and as we progress through 2024, we will gradually shift some of our higher-beta/lower-credit quality sectors and credits into lower-beta/higher credit quality as economic challenges become more pronounced. Finally, Sage will continue to tactically leverage volatility events, as they represent some of the most attractive entry points.

 

January 11, 2024 — This presentation provides an overview of our market outlook and key themes, and it illustrates how Sage is positioned in the current environment.

Key Themes

• Technical Factors Should Remain Supportive — There are $95.4 billion in maturity and coupon payments expected in the first quarter with limited new issue supply.
• Credit Strength vs. Uncertain Rate Risk — Municipal issuers are well positioned to weather any economic slowdown, but rate volatility will be elevated as Treasury yields react to rapidly changing market factors.
• “De Minimis” Tax Effects — The little-known pricing/tax risk regarding municipal bonds has caused performance volatility and altered return expectations.

The investment objective of this strategy is to minimize downside risk in any environment and maintain consistent quarterly after-tax total returns over an intermediate to long term investment horizon.

The investment objective of this strategy is to minimize downside risk in any environment and maintain consistent quarterly after-tax total returns over an intermediate investment horizon.

The investment objective of this strategy is to minimize downside risk in any environment and maintain consistent quarterly after-tax total returns over a short to intermediate term investment horizon.