Touchstone Impact Bond Fund Commentary – Q4 2021
Thesis
TCPNX (yielding 1.79%) is a smaller fund that does not have as many assets under management compared to our other core mangers, enabling them to make more nimble and tactical decisions. By making small allocations to undervalued “riskier” asset classes (high-yield and non-dollar denominated debt), TCPNX diversifies our fixed income portfolio and generates superior returns to the benchmark (Barclays U.S. AGG). We like that the fund utilizes a bottom-up investment process through proprietary framework analysis, fundamental security review, and portfolio risk management.
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Overview
In the fourth quarter of 2021, TCPNX underperformed the benchmark (Barclays U.S. AGG) by 10bps primarily due to the overweight in spread products, which saw widening during the quarter. An underweight to Treasuries, which saw strong performance, also detracted from returns. As for duration, the fund continues to have a neutral approach which had minimal to no effect on performance.
Q4 2021 Summary
- TCPNX returned (0.11%), while the U.S. AGG returned 0.01%
- Quarter-end effective duration for TCPNX was 6.3 and 6.6 for the U.S. AGG
- Three largest contributors
- Build America Bonds, U.S. Treasuries, and U.S. Small Business Administration (SBA) securities
- Three largest detractors
- Exposure to banks, insurance companies, and Ginnie Mae Project Loans (ie. CMBS)
2021 Performance Comparison
[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