Municipal Bond Portfolio Management continued ...*

Below is an outline of how the portfolio manager creates and manages custom portfolios tailored to meet your specific financial objectives, risk profile, and time horizon.

Structure

The portfolio manager utilizes a macro-economic framework as an initial step in the process of structuring and managing portfolios. The manager's outlook, combined with current market conditions, drives decisions such as sector emphasis and structuring along the yield curve. The client’s individual profile, financial objectives, and any agreed-upon benchmarks further drive portfolio structure. Representative structure elements include:

• Maturity/duration/option-adjusted duration.
• Call features/convexity.
• Portfolio strategies include laddered, barbell, intermediate and long term actively managed portfolios.
• Immunization, as appropriate.
• Benchmark-driven characteristics.

Purchase/Management Discipline

Within the above framework, the manager's orientation is one of  “relative value.” Here are the steps the manager uses to create your portfolio:

1. Carefully considered selection of industry sectors and individual securities. In-house research, as well as credit and strategy research from Wall Street sources is utilized.  The portfolio manager does not compromise credit quality in the pursuit of financial returns. The portfolio manager invests in appropriately structured, highly liquid investment grade credits.
    
2. Swapping out of sectors or bonds that have outperformed the market and reinvesting in undervalued securities/sectors.
    
3. The team considers a client’s entire investment portfolio and tax needs in taking losses and gains. Communication with clients’ other managers is encouraged to allow for profit and loss allocations to be managed across asset classes to achieve maximum after-tax returns.
    
4. The portfolio manager actively monitors and can arbitrage the relationship between the taxable and tax-exempt markets

Tax Efficiency**

• In the municipal market, losses are valuable. Consistent with client guidelines, the portfolio manager favors taking losses using tax-loss swaps as market conditions permit throughout the year, not just at year end.
• Losses can be coordinated to offset gains in other client asset classes.
• Portfolios are generally managed to minimize capital gains.

Sell Discipline

Portfolios are managed in a conservative style that emphasizes monitoring and controlling of risk. Developments that can trigger sales include:

• Deterioration of credit quality
• Overvalued sector.
• Maturity, duration no longer match objectives.
• Tax swap programs.

Risk Control Management**

The portfolio manager's conservative style emphasizes preservation of assets. In addition, they have access to credit and strategy research from independent third party providers. Risk control includes:

• Credit risk / ongoing monitoring of credits.
• Market risk / limit amount of exposure consistent with client objectives.
• Reinvestment risk addressed in structure.

This sounds interesting. Can Beacon Capital Management Advisors do a free review of my existing municipal bond portfolio or can a free hypothetical portfolio be created for me?

Yes. Contact us and we would be happy to.  To contact us click here.

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Disclosures:

* Tax sensitive investing may not provide as high a return as other investments before consideration of federal income tax consequences.

* Bonds contain interest rate risk (as interest rates rise bond prices usually fall); the risk of issuer default; and inflation risk. The municipal market is volatile and can be significantly affected by adverse tax, legislative, or political changes and the financial condition of the issuers of municipal securities. Interest rate increases can cause the price of a debt security to decrease. A portion of the dividends you receive may be subject to federal, state, or local income tax or may be subject to the federal alternative minimum tax. A portion of the income may be subject to state taxes, local taxes and the federal alternative minimum tax.

** Consult a tax or financial professional for further information or consult current tax laws for full details.

** Information contained in these sections merely highlight some benefits. There are risks involved with all investments that could include tax penalties and risk/loss of principal.