Intermediate Value

Uncover hidden gems in the municipal marketplace.

If you would like a next-level intermediate portfolio, consider the Intermediate Value strategy offered here at Gurtin Municipal Bond Management. Thanks to the in-depth, offensive research that we employ in managing this strategy, we believe we are able to identify structural and credit mispricing in the high-grade segment of the municipal market, allowing our team to target what we see as attractive bonds that others may have overlooked. With this municipal investment strategy, your objective is to achieve a level of tax-exempt income which exceeds that of a standard intermediate portfolio. *

Keep reading to learn more about which types of investors benefit from this strategy as well as the unique features of the Intermediate Value strategy. In addition, discover key strategy statistics and historical performance information. You will also be able to download strategy fact sheets and explore answers to commonly asked questions.

Investor Profile

Suitable for Clients Focused on Capturing Relative Value

Intermediate Value Features

When Average Simply Isn’t Good Enough

If you seek to outperform a traditional intermediate-term laddered portfolio, but don’t want to sacrifice credit quality to achieve it, Gurtin’s Intermediate Value strategy might be perfect for you. *

Affectionately referred to as our “enhanced ladder” strategy in house, the Intermediate Value strategy involves the use of a unique portfolio structure comprised of both a 1 – 8 year ladder and callable bonds with maturities extending out to 15 years. This creative structure allows our team to maintain a relatively consistent duration profile while leveraging our expertise in the callable bond space and municipal credit research. In particular, our quantitative research team seeks to uncover value that managers tend to overlook if sticking to a simple laddered approach or relying on ratings agency ratings.

Our research team works to identify bonds that we determine to be mispriced due to a reliance on archaic pricing conventions, a misunderstanding of complex bond structures, or a misunderstanding of underlying credit quality. Through in-depth analysis, we are often able to identify what we believe are opportunities that others miss. The result has historically been a level of tax-exempt income that generally exceeds that of an intermediate-term index.

Intermediate Value Key Statistics

Key Statistics
  Composite Benchmark
Quality
Average Credit Quality
Data as of .
See the bottom of this page for important disclosures.

Ready to Get Started?

If the Intermediate Value strategy objectives and performance data align with your client’s investment objectives, we invite you to take the next step and request a portfolio review, so our Advisory Services team can open a new account for your client as soon as possible:
OR
If the objectives of the Intermediate Value strategy do not match your municipal investment goals, please complete a quick questionnaire, which will help guide you toward a strategy that may be right for you:

Frequently Asked Questions

Have Questions? We Have Answers.


HOW IS THIS STRATEGY DIFFERENT FROM THE MUNICIPAL LADDER – INTERMEDIATE STRATEGY?

The Intermediate Value strategy differs from the Ladder strategy in a few ways. For instance, the Intermediate Value strategy’s main objective is to provide returns in excess of that of a standard intermediate-term portfolio while the Ladder strategy’s objective is to provide a predictable level of income. * To accomplish the primary goal, our team uses in-depth and offensive research to identify “hidden gems” — callable bonds and credits that we believe are overlooked and undervalued in the municipal bond market; in contrast, our Ladder portfolios invest in bonds with more straightforward structures and broadly recognized credit quality. In addition, portfolios managed under our Intermediate Value strategy are of both a 1 – 8 year ladder and callable bonds with maturities extending out to 15 years, whereas portfolios managed under our Ladder strategy are typically comprised of almost 100% bullet bonds.


WHY DOES THIS STRATEGY HAVE A HIGHER VOLATILITY THAN THE MUNICIPAL LADDER – INTERMEDIATE STRATEGY?

In order to identify bonds that are mispriced due to inherent structural pricing inefficiencies in the market, we may target slightly longer effective duration in the Intermediate Value strategy than we do in the Municipal Ladder – Intermediate strategy. In an upward-sloping yield curve environment, longer duration allows for capturing higher yield, which in turn, generally leads to higher returns, as the investor is rewarded for assuming additional risk.


WHY DOES THIS STRATEGY HAVE A HIGHER YIELD THAN THE MUNICIPAL LADDER – INTERMEDIATE STRATEGY?

There are several reasons this strategy generally has higher yield than the Municipal Ladder – Intermediate strategy does. One of the reasons is that the slightly longer effective duration mentioned above often leads to additional yield, again, due to the added risk assumed with longer duration targets. More significantly, the primary objective of this strategy is to uncover relative value (i.e., returns) in excess of that of a standard intermediate-term portfolio. * Because this is meant to be a buy-and-hold strategy, however, Intermediate Value does not offer the same level of liquidity nor does it offer as low of volatility as the Municipal Ladder – Intermediate strategy does.

For information about strategies for which you can choose your targeted maturity range, please compare strategies.


DO YOU HOLD BONDS TO MATURITY?

We follow a disciplined approach of selling bonds when their maturity falls below one (1) year, because doing so offers key advantages. Otherwise, barring any credit issues, we generally hold bonds to maturity.


HOW DOES THIS STRATEGY COMPARE TO YOUR OPPORTUNISTIC VALUE STRATEGY?

For both our Intermediate Value and Opportunistic Value strategies, our team purchases what we consider to be “value securities” — for Intermediate Value, this means bonds that we believe to be mispriced and offer a resulting opportunity to capture excess yield, while for Opportunistic Value this additionally refers to investment grade bonds with obligors (i.e., the entities responsible for repaying principal and interest on a bond) that may be lesser known within the municipal bond market but that still have solid credit quality. The primary differences between these two (2) strategies, however, lie in their duration and approach to investment.

With Intermediate Value, duration is somewhat less flexible than it is with Opportunistic Value because portfolios managed under the former strategy are comprised of both a 1 – 8 year ladder and callable bonds with maturities extending out to 15 years, while still maintaining an overall intermediate term. In contrast, duration is completely flexible for Opportunistic Value because we are willing to target the portions of the yield curve where value is found, which changes over time.

Portfolios managed under our Intermediate Value strategy are fully invested following a new account’s initial investment period, which is typically within a couple of months. Full investment for portfolios managed under our Opportunistic Value strategy, however, may take longer to reach, depending on market availability of bonds that meet our yield targets.


CAN INTERMEDIATE VALUE PORTFOLIOS BE CUSTOMIZED BY STATE?

Investors residing in California and New York can optimize tax efficiency by choosing a California or New York state-specific Intermediate Value portfolio, respectively. In consideration of clients’ best interests, we only purchase bonds with high-quality credit profiles that adhere to our strategy objectives. For this reason, other state-specific options are not available given that we do not see sufficient availability of attractive bonds that fit our investment criteria for this strategy while supporting portfolio diversification.


READY TO GET STARTED?
To learn more about how we can customize portfolios to meet investors' specific investment objectives, please contact our Advisory Services team by calling (858) 436-2200 or by emailing AdvisoryServices@gurtin.com.