During the third quarter, the iM Dolan McEniry Corporate Bond Fund finished ahead of the benchmark. The fund had a loss of 1.64% versus the Bloomberg U.S. Intermediate Credit benchmark decline of 3.08%. The Fund is beating all of its benchmarks year to date.
Institutional Class launch date is 9/28/2018. Advisor Class launch date is 5/17/2019. Benchmark Since Inception is as of the Institutional Class Inception date.
Performance quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the funds may be lower or higher than the performance quoted. Short term performance is not a good indication of the fund’s future performance and should not be the sole basis for investing in the fund. To obtain standardized performance of the funds, and performance as of the most recently completed calendar month, please visit www.imgpfunds.com. There are contractual fee waivers in effect through 4/30/2023. In the absence of such waivers, total return would be reduced.
Performance shown prior to the inception of the Advisor Shares reflects the performance of the Institutional Shares and excludes expenses that are not applicable to, and are lower than, those of Advisor Shares. The performance of the Advisor Shares will differ from that of the Institutional Shares due to differences in expenses.
Performance as of 09/20/2021 is that of the Predecessor Fund. All of the assets and liabilities of the Predecessor Fund were transferred to the Fund in a reorganization on 09/20/2021.
During the third quarter, declines were seen in many equity and fixed-income markets. Continued uncertainty over inflation, economic growth, and geopolitical concerns led to higher interest rates and heightened volatility.
During the quarter, the Federal Reserve increased the lower bound of the Federal Funds Rate from 1.50% to 3.00%. Treasuries sold off significantly due to the rate hikes and continued hawkish commentary from the Federal Reserve as they move to tame inflation. Yields are substantially higher year to date and are among the highest they have been in over a decade. Overall, credit quality remains strong although there have been pockets of deterioration. Dolan McEniry continues to monitor markets for any opportunities that may arise
As treasury rates increased, the yield curve remained inverted in the quarter as the 10-year U.S. Treasury yield increased from 3.02% to 3.83%, the 5-year yield increased from 3.04% to 4.09% and the 2-year yield increased from 2.96% to 4.28%.
Per Bloomberg data, spreads of corporate investment-grade bonds widened 4 basis points during the quarter to an average option adjusted spread (“OAS”) of +159 basis points. The OAS of the Bloomberg Corporate High Yield Index tightened 17 basis points to +522 basis points at quarter end.
On a relative basis, the iMGP Dolan McEniry Corporate Bond Fund outperformed the Bloomberg U.S. Credit Intermediate Index by 144 basis points. The fund’s outperformance was driven by its relative outperformance in corporate investment-grade and overexposure to high-yield as opposed to government related securities. The yield curve positioning and duration had a minimal effect on relative performance versus the benchmark.
Outlook and Strategy
Dolan McEniry believes that client portfolios are positioned to provide reasonable absolute and relative returns going forward. Dolan McEniry’s core competence is credit analysis, and we focus on a company’s ability to generate generous amounts of free cash flow over time in relation to its indebtedness. Investment safety and risk mitigation are of primary importance as we continue to search for undervalued fixed income securities. As of September 30th, the iMGP Dolan McEniry Corporate Bond Fund had an +88 basis point yield premium and similar duration versus the Bloomberg U.S Intermediate Credit. We believe these stats will allow the portfolio to perform well versus the benchmarks over time.
|09/30/22 Stats||iM Dolan McEniry Corporate Bond Fund||Bloomberg U.S. Intermediate Credit|
|Yield to Worst||6.29%||5.41%|
|Yield to Maturity||6.30%||5.41%|
|Effective Duration||3.80 Years||4.08 Years|
Yield Curve and Duration: The yield curve positioning and duration had a minimal effect on the performance versus the benchmark.
During the quarter, the iMGP Dolan McEniry Corporate Bond Fund outperformed the Bloomberg U.S. Credit Intermediate Index by 144 basis points. The fund’s outperformance was driven by its relative outperformance in corporate investment-grade and overexposure to high-yield as opposed to government-related securities.
|Top Performers||Bottom Performers|
|Lumen Technologies Inc.||Warner Bros Discovery Inc.|
|TransDigm Group Inc.||H&R Block Inc.|
|Microchip Inc.||HP Inc.|