Client Profile
Foundation (Customized Limited Term Taxable Municipal Bond Strategy)
A risk-adverse Southeastern foundation had been funding operational expenses through income generated by cash and cash-enhanced investment vehicles. The dramatic fall in short-term rates forced the foundation to use principal to fund its day-to-day operations.
- The foundation was unwilling to risk principal by allocating to a lower quality fixed-income strategy.
- Treasury and other government-guaranteed securities did not provide the required income targets without an allocation to a very long duration strategy.
Breckinridge proposed a high-grade, taxable municipal allocation, achieving client objectives of increased income with limited credit risk and an intermediate duration.
