The Segall Bryant & Hamill Colorado Tax Free Fund
Reduce Your Clients’ Tax Bills While Helping Them Invest in Their Own Back Yard
Do you have tax-sensitive clients who want to reduce their tax bill? Do you need an investment option to help them keep more of what they earn?
The Segall Bryant & Hamill Colorado Tax Free Fund (WTCOX) may be just the right vehicle. It is a high-quality municipal bond fund focused primarily on investment-grade bonds of intermediate maturity that provide income that is exempt from both federal and Colorado state taxes.
Opportunity for Attractive Yield Relative to Taxable Investments
Tax-exempt municipal bonds can offer an advantage over taxable investments, particularly for investors in higher tax brackets. For example, an investor in the Segall Bryant & Hamill Colorado Tax Free Fund who is in the 37% tax bracket could potentially earn a tax-equivalent yield of 2.52%. This is significantly higher than the nominal yields of Treasury and Corporate (A-rated) index yields (as represented by the Bloomberg Barclays Treasury Index and Bloomberg Barclays Single A Corporate Index, respectively).
The same holds true for investors in a lower tax bracket, such as a 24% bracket. An investor in this bracket could potentially earn a tax-equivalent yield of 2.09% by investing in the Segall Bryant & Hamill Colorado Tax Free Fund, which is still higher than nominal yields of Treasury and Corporate index yields.
Benefits of Investing in a Colorado-Only Municipal Bond Fund
There are many compelling reasons for your clients to invest in a Colorado municipal bond fund compared to a national municipal bond fund. These include:
- The satisfaction that comes from investing in their own back yard. Your clients can participate in a fund that invests in municipal securities that provide valuable funding for many public projects in their home state – such as fire protection districts, school districts, hospitals, libraries, sewer and sanitation systems, and much more.
- Colorado has a healthy and diverse economy that is experiencing strong growth. This provides a positive environment for municipalities across the state.
- The Colorado municipal market is diverse and offers a range of individual credits in which to invest.
- Investing in a Colorado-based fund allows your clients to avoid the credit risk that may be associated with municipal securities in other states.
Investment Approach Designed to Deliver Attractive Income and Risk-Adjusted Returns
The Segall Bryant & Hamill Colorado Tax Free Fund’s portfolio managers invest in high-quality, intermediate-maturity, tax-exempt municipal bonds with the goal of generating attractive income while performing well in all periods, with an emphasis on downside preservation. They seek to take advantage of inefficiencies in the municipal market by identifying high quality, overlooked issues that offer a measurable return advantage. The portfolio managers analyze the creditworthiness of each bond through a rigorous, proprietary fundamental research process. More specifically, they assess the financial strength of the issuing municipalities along with their ability to generate revenues or levy taxes in order to meet their obligations.
As Colorado residents, the portfolio managers of the fund have “on the ground” access to local projects and issuers. This allows them to better evaluate a project’s long-term prospects for success. The portfolio managers seek to construct a portfolio through a bottom-up bond selection process. They select bonds from many areas of the state in an effort to reduce the economic risk to the portfolio from any particular local economy within the state. From a top-down perspective, the portfolio managers carefully manage interest rate risk to mitigate price volatility.
Experienced Investment Manager – Experienced Portfolio Management Team
The Fund’s investment manager, Segall Bryant & Hamill, brings decades of experience to the Segall Bryant & Hamill Colorado Tax Free Fund. The firm’s experience managing fixed income assets for large institutional clients, its consistently applied investment process, and its extensive investment expertise in Colorado municipal securities all contribute to assembling a portfolio of low-risk, double tax-exempt bonds. The Fund’s portfolio managers, Nicholas Foley and Kenneth Harris, CFA, have over four decades of combined municipal bond investing expertise. They are backed by SBH’s entire Fixed Income team.
To learn more, reach us at (800) 734-9378 or firstname.lastname@example.org
Interest Rate Risk: A principal risk of investing in the Fund is that the value of a fixed income portfolio will generally decrease when interest rates rise, which means the Fund’s net asset value (“NAV”) will likewise decrease.
Credit Risk: The Fund is subject to the risk that an issuer may be unable to make principal and interest payments when due or that the price of the security changes due to a downgrade in the credit quality of the issuer. Corporate bonds are generally subject to higher levels of credit risk than government bonds.
The Segall Bryant & Hamill Colorado Tax Free Fund invests primarily in instruments issued by or on behalf of one state and generally will be more volatile and loss of principal could be greater due to state specific risk.
A portion of income may be subject to the alternative minimum tax. Income earned by non-Colorado residents will be subject to applicable state and local taxes.
Yield to Worst: A measure of the lowest possible yield that can be received on a bond that fully operated within the terms of its contract without defaulting.
This material must be preceded or accompanied by a prospectus. Please read it carefully before investing.
The Segall Bryant & Hamill Colorado Tax Free Fund is distributed by Ultimus Fund Distributors, LLC.
The Bloomberg Barclays A Corporate Index is the A component of the U.S. Credit index and includes investment grade (Moody’s Investor Services Aaa to Baa, Standard and Poor’s Corporation AAA to BBB), publicly issued U.S. corporate and specified bonds.
The Bloomberg Barclays Treasury Index includes public obligations of the U.S. Treasury with a remaining maturity of one year or more.
The Bloomberg Barclays U.S. 1-15 Year Municipal Bond Index measures the performance of investment grade (Moody’s Investor Services Aaa to Baa, Standard & Poor’s AAA to BBB) general obligation and revenue bonds with maturities ranging from 1 to 17 years. It is a broad index that is representative of the tax-exempt bond market. Investors cannot invest directly in an index.
The performance data quoted represents past performance and does not guarantee future results. Performance information for the institutional class shares prior to their inception is based on the performance of the retail class. Current performance may be lower or higher than the performance quoted. To obtain current performance as of the most recent month-end, please call (800) 392-2673. Average annual total returns reflect the reinvestment of dividends, capital gains distributions, all fee waivers and expense reimbursements. If imposed, the fee would reduce the performance quoted. Investment return and principal value will vary, and shares, when redeemed, may be worth more or less than their original cost.
Retail Class Annual Expense Ratio — Gross: 0.72%, Net: 0.65%
Institutional Class Annual Expense Ratio — Gross: 0.56%, Net: 0.50%
Retail class inception date: 6/1/1991; Institutional class inception date: 4/29/2016.
Quotations of yield reflect all fee waivers and/or expense reimbursements. Without the absorption of these fee waivers and/or expense reimbursements, the figures quoted would have been lower. As of 12/31/20, the 30-Day SEC Yield for the period noted for the Segall Bryant & Hamill Colorado Tax-Free Fund is Retail with waivers: 1.07%, Institutional with waivers: 1.22%; Retail without waivers: 1.05%, Institutional without waivers: 1.19%.
For Financial Professional Use Only