Municipal Bond Portfolio Management

Municipal bonds serve as the bedrock asset class for high-net-worth and income-oriented investors. Low historical default rates and tax-exempt interest make municipal bonds an ideal security for your “mattress-money” allocation.

That said, with over one million municipal securities outstanding1, divergent tax regimes, and a market dominated by large benchmark-driven buyers, a bottom-up and specialized approach to municipal bond portfolio management is required.

Since 1984, our disciplined approach to municipal bond portfolio management has optimized client portfolios for yield and principal preservation.

Bernardi relies on a proven municipal bond portfolio management process founded on the following:

  • Separate Account Management (SMA) – Tailored portfolios designed around particular investment parameters in order to enhance income and preserve principal. The SMA enables direct ownership, control, and transparency.
  • Benchmark Agnostic, Active Management – we aim to capitalize on inefficiencies in the municipal bond market, which is driven by passive funds and major managers. Instead of focusing on common, benchmark-included bonds, we target small-to-medium-sized issuers that are not typically part of major indices. These overlooked opportunities may provide higher yields.
  • Value-Oriented Strategy – We target out-of-favor, or relatively uncovered credits, and generally utilize a laddered portfolio structure to reduce the impulse of market timing. Total Return and Goal-Based strategies are available, as well.
  • Credit Analysis – Bottom-up credit analysis serves as the foundation of the portfolio management process. This helps mitigate credit risk and reduce portfolio turnover.  The philosophy is known as our Three Pillars of municipal credit research.
  • Client Choice – Selection of either fee-based or transaction-based cost structures. The transaction-based payment structure enables direct access to primary market issues, and no annual fees. Nor are there markups on new issues, as the issuance cost is paid for by the issuer, not the investor.  
  • Performance Driven – We strive to outperform market benchmarks.

Municipal Bond Portfolio Management Overview
A summary of the Bernardi Securities approach to active municipal bond portfolio management.
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Bernardi Offers Fee-only and Non-fee options:

Bernardi Asset Management, LLC (BAM)

BAM is the fiduciary, fee‑only, SEC registered, investment advisory arm of Bernardi Securities, Inc. (“BSI”) and a wholly‑owned subsidiary of BSI. Management is conducted on a separate account, discretionary or non‑discretionary basis, with BAM serving as an investment advisor with a fiduciary duty. The client does not pay mark‑up/mark‑down charges to BAM. Client payments are based upon a percentage of value of assets under management per the BAM tiered fee schedule. BAM does not receive any direct or indirect fees from vendors. Securities offered through Bernardi Securities, Inc., member FINRA, SIPC. Advisory Fees are described in BAM’s Part 2 of the Form ADV.

Bernardi Securities, Inc. (BSI)

BSI is a broker‑dealer specializing in active municipal bond portfolio management for private clients, public finance services, and fixed income capital market services. Management is conducted on a separate account, discretionary or non‑discretionary basis, with a traditional non‑fee payment structure. Clients pay based on transactions, only when securities are bought or sold. This one‑time cost is captured in the price of the bond and memorialized to clients as requested. BSI is subject to a multitude of regulations including Regulation Best Interest, suitability, best-execution, and “know-your-customer.”

1. Source: http://www.msrb.org/msrb1/pdfs/MSRB-Muni-Facts.pdf