How Mackay Shields MD David Dowden Maximizes Income For Shareholders
Jul 24, 2023
auto_awesome
David Dowden, Managing director at Mackay Shields, discusses maximizing income for municipal portfolios post-volatility. Topics include tax swaps, bond market rallies, strategies for generating income, and challenges in fixed income portfolios amidst declining yields and rising interest rates.
Strategizing tax swaps can enhance income in municipal bond portfolios post-market turmoil.
Utilizing tax swap trades and loss-accumulating transactions can improve income levels for investors.
Deep dives
Challenges in Fixed Income Portfolio Construction
Underlying the conversation on fixed income portfolio construction are the challenges faced by municipal investors in generating tax-exempt income. The podcast illustrates a history of declining yields and credit spreads, leading to a lack of income generation for investors. The significant decline in yields, especially in the short to medium duration curve, created frustration among investors seeking reasonable tax-exempt income.
Adapting to Changing Market Dynamics
The podcast delves into the impact of inflation and Federal Reserve actions on the municipal bond market in 2022. As inflation and rates surged, municipal bonds faced redemption pressures as investors moved away, causing underperformance against treasuries. This shift in market dynamics prompted portfolio managers to strategize on generating income, leading to the exploration of tax swap trades and loss-accumulating transactions.
Strategies for Portfolio Repositioning
In response to market challenges, portfolio managers adopted strategies to reposition portfolios for improved income levels. One such strategy involved tax swap trades, where bonds with similar structures were exchanged, increasing yield and capturing losses for future gains. The utilization of tax swaps as a means to boost income proved essential in navigating the intricate municipal bond market landscape.
David Dowden, managing director at Mackay Shields, discusses with Seth Brumby, Deputy Managing Editor at Reorg, how to generate income for municipal portfolios following recent bouts of volatility in this week’s podcast.
Fixed income portfolios struggled for over a decade with a secular decline in interest rates, which reduced income for bondholders. This was followed by a meteoric rise in inflation and interest rates that hammered bond values. This was an opportunity to accrue tax swaps that can be applied toward future tax liabilities once the bond market rallied and produced better income generating investments.
If you are not a Reorg subscriber, request access here: go.reorg-research.com/Podcast-Trial
We're looking for feedback to improve the podcast experience! Please share your thoughts here: www.research.net/r/Reorg_podcast_survey
For more information on our latest events and webinars: reorg.com/resources/events-and-webinars/
Sign up to our weekly newsletter Reorg on the Record: reorg.com/resources/reorg-on-the-record/
#leveragedfinance #highyield
Get the Snipd podcast app
Unlock the knowledge in podcasts with the podcast player of the future.
AI-powered podcast player
Listen to all your favourite podcasts with AI-powered features
Discover highlights
Listen to the best highlights from the podcasts you love and dive into the full episode
Save any moment
Hear something you like? Tap your headphones to save it with AI-generated key takeaways
Share & Export
Send highlights to Twitter, WhatsApp or export them to Notion, Readwise & more
AI-powered podcast player
Listen to all your favourite podcasts with AI-powered features
Discover highlights
Listen to the best highlights from the podcasts you love and dive into the full episode