MWTIX Commentary – Q1 2021
Thesis
MWTIX (currently yielding 1.16%) is an actively managed fund that provides a sector-based strategy while still maintaining fundamental research driven through issue selection. When compared to the benchmark (Barclays U.S. AGG), the holdings have similar duration and exposure, yet selection is focused around areas where other managers are not looking. Through sector rotation and active weighting, we expect MWTIX to generate alpha over time.
[more]
Overview
In the first quarter of 2021, MWTIX outperformed the benchmark (Barclays U.S. AGG) by 46bps, largely due to the fund’s positioning to have a shorter duration than the index. Issue selection among corporate credit also contributed to performance, yet the underweight to the sector was a drag on performance. Overweights to healthcare and communications, as well as an allocation to high yield corporates also helped boost returns. A Municipal debt overweight contributed due to yield premiums, while securitized products were mixed: agency MBS detracted while non-agency MBS and FFELP student loan ABS contributed to returns.
Q1 2021 Summary
- MWTIX returned -2.91%, while the U.S. AGG returned -3.37%
- Quarter-end effective duration for MWTIX was 6.35 and 6.40 for the U.S. AGG
- Strategy has returned to a more defensive and liquid one due to historically tight spreads and continued risks
Outlook
- We continue to hold this fund and believe in our thesis due to the fund’s defensive approach and minimal exposure to more vulnerable issuers and industries
- Opportunities
- Securitized – current coupon agency MBS TBAs, legacy non-agency MBS, AA and A-rated CMBS
- EM debt
- CLOs
- MWTIX has positioned itself to take advantage of relatively attractive prices during times of high volatility to generate strong returns
[Category Mutual Fund Commentary]
Micah Weinstein
Research Analyst
Direct: 617.226.0032
Fax: 617.523.8118
Crestwood Advisors
One Liberty Square
Suite 500
Boston, MA 02109