New York, NY – The Short Duration Income Fund’s Institutional Class outperformed the Bloomberg U.S. Aggregate 1-3 Year Index, returning +1.16% in the first quarter and +5.46% for the one-year period ending March 31, 2024. This success comes in the wake of challenging investment conditions over the past year, with positive absolute results and strong relative performance reported for both the quarter and the year.

Following a remarkable rally in the fourth quarter, U.S. fixed income markets experienced a slowdown at the beginning of 2024. Interest rates rose across the yield curve as investors adjusted their expectations regarding Federal Reserve interest rate cuts. This led to modest gains for shorter-duration and more credit-sensitive sectors, with intermediate and longer-duration bonds experiencing small to moderate losses.

While interest rates rose, risk assets continued to rally throughout the first quarter. This rally was influenced by the Fed’s pivot in monetary tightening policy announced in November, which instilled confidence in investors. Additionally, the announcement of a shift in government funding towards T-Bills led to optimism in the market, with Treasury bond rates briefly surpassing 5% for the first time in over 16 years.

Credit spreads in the market continued to decline, reaching near 10-year lows. This trend was observed in both investment-grade and high-yield sectors, indicating a shortage of credit supply to meet demand. Investor behavior in primary and secondary markets pointed towards a sense of complacency, with record levels of new issue subscriptions and significant flattening in credit curves.

The Short Duration Income Fund’s forward return prospects, measured by yield-to-worst (YTW), have exceeded historical averages, reaching 5.7% as of March 31, 2024. This reinforces the fund’s improved role in asset allocation frameworks, showcasing the potential for strong returns.

In terms of portfolio positioning, the fund made strategic allocations in various sectors, with a focus on high-quality bonds while maintaining an average effective duration of 1.0 to 3.5 years. The first quarter saw noteworthy additions in non-agency mortgage-backed securities, agency MBS, ABS, corporate CLOs, and infrastructure/project CLOs, all aimed at maximizing investment income and avoiding interest-rate bets.

The value of diversification in fixed income was emphasized, with the fund’s approach focusing on a broad market exposure encompassing benchmark and non-benchmark categories. This strategy aims to leverage opportunities in different macro environments while maintaining a diversified portfolio capable of navigating various market conditions.

Overall, the fund’s active and flexible approach, combined with a bottom-up, research-driven investment strategy, positions it well to deliver value to investors. With a strong focus on risk-adjusted returns and maintaining a diverse portfolio, the fund aims to preserve capital, maintain liquidity, and capitalize on favorable risk/reward opportunities.

Investors looking to understand the fund’s performance, holdings, and investment strategies can refer to the prospectus or summary prospectus for detailed information. Risks associated with investing in the fund, including market risks and concentration risk, should be carefully considered before making investment decisions.

As the fund continues to navigate changing market conditions and seek attractive opportunities, it remains committed to delivering value to shareholders while upholding a flexible and research-intensive investment approach.