Asset Preservation Advisors
Asset Preservation Advisors (APA) is a registered investment advisor founded in 1989. APA specializes in managing high quality tax-exempt and taxable municipal bond portfolios for other registered investment advisors, family wealth offices and institutional clients.
APA MARKET COMMENTARY
1Q16: Shaping the Curve: Supply & Demand
The demand for yield has been a consistent theme over the past two years. Municipal market supply continues to be well absorbed as investors demand income and stability in a low rate environment with heightened global volatility. Quantitative easing abroad and negative interest rate policies have contributed to stronger demand in U.S. fixed income markets, with both the Treasury and Municipal Bond markets seeing significant demand from safe-haven buyers. Tellingly, municipal bond mutual funds extended their run of inflows to 28 straight weeks. Municipal bonds posted positive returns for the 9th consecutive month. Year-to-date outperformance was driven by both reassurance from the Federal Reserve Board that they would “proceed cautiously in adjusting policy” and strong investor demand for relative stability and income. The market’s perception seems to be for inflation expectations to remain low and for a slower path to monetary normalization. Municipal bonds outperformed the U.S. Treasury Index in March on the heels of dovish comments from Fed Chair, Janet Yellen, and the perception that geopolitical risks and volatility in global markets could keep a ceiling on longer-term interest rates over the year ahead. Click here to read the latest quarterly commentary.
4Q 2015: Muni's: Top Performer in 2015
Municipals topped the list of best performers of 2015, with risk adjusted returns besting other fixed income asset classes and the S&P 500 Index, alike. A turbulent year, 2015 was riddled with geopolitical strife, downturns in the global stock markets, the slumping price of oil and the highly anticipated first rate hike by the U.S. Federal Reserve in almost 10 years. Defaults fell for a fifth straight year as increased revenues and cost cutting measures have contributed to stronger financials for state and local governments. Nationally, total state tax revenue recovered more than two years ago from its plunge in the Great Recession. By mid-2015, states collectively took in 5.6 percent more tax revenue than they did at the 50-state peak in the third quarter of 2008, after accounting for inflation and seasonal fluctuations as reported by Pew Charitable Trust. The last two years have ended with Municipals at the top of the list of best performers, in our opinion offering an attractive relative value and lower volatility in an uncertain market. Click here to read the latest quarterly commentary.
3Q 2015: One Quarter, Two Halves
The Third Quarter of 2015 may be remembered as the three months where volatility returned, and returned with a vengeance; and where the Federal Open Market Committee (FOMC) added even more uncertainty to an already murky policy. What looked to be another period of low volatility, with the S&P 500 continuing to trade between its months’ long band of 2,050-2,125, and the market patiently awaiting a confidence boost from the Fed regarding the economy, instead took a nasty turn in the middle of August as the People’s Bank of China (PBOC) devalued the Yuan by the most in two decades, sending shockwaves across world markets. Although the bank did its best to reassure market participants that this was a one-time adjustment and that going forward the currency would be allowed move with natural supply and demand, markets saw this as a warning of the Chinese economy slowing greater than previously anticipated and braced for the worst, sending commodities down a steep slide, treasury rates diving, and volatility across global equity markets soaring.
APA WHITE PAPERS
"Hartford, We Have a Problem"
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Bail-In: The New Order of Risk
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Dodd-Frank & Money Market Reform: New Risks for Cash Management
Muni ETFs vs. Muni SMAs
APA Maintains Watch Status on Private Higher Education Bonds
Do Your Clients Own Appropriation-Backed Municipal Bonds?