The Benefits Of Active Municipal Bond Management


Robert DiMella is an executive managing director and co-head of MacKay Municipal Managers team™, which he manages jointly with John Loffredo at their Princeton, New Jersey office. Together, Robert and John oversee a team of ten municipal bond specialists with a focus on all aspects of the group’s business, including oversight of portfolio management and research, as well as client relationships and product development. The team works by looking at the economic landscape, policy and market technicals and determines the impact these factors have on the muni market. In total, as of 3/31/17, MacKay Municipal Managers™(MMM) team’s municipal bond assets total $20 billion, this includes the MainStay Tax Free Bond fund (MTBAX).

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Robert has been a municipal portfolio manager and municipal analyst since 1993, with a broad range of experience in portfolio management and research in the municipal markets. Robert joined MacKay Shields in July 2009 when the firm acquired the assets of Mariner Municipal Managers LLC, where he served as president and co-founder from 2007 to 2009. From 2006 to 2007, he was a managing director and co-head of BlackRock’s Municipal Portfolio Management Group. Prior to BlackRock’s merger with Merrill Lynch Investment Managers, he served as a senior portfolio manager and managing director of Merrill Lynch’s Municipal Products Group, where he worked from 1993 to 2006. Robert earned his MBA at Rutgers University Business School and BS at the University of Connecticut. He is a CFA . He has been working in the investment industry since 1989.

I spoke with Bob on April 27 at the Morningstar Investment Conference.

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What is your role in your organization and what areas of the muni market do you focus on for financial advisors?

I am the co-head of the MacKay Municipal Managers (MMM) team. We manage all of the municipal bond products for the umbrella company under New York Life. Therefore, we have mutual funds, private funds, closed-end funds, and separately managed accounts for clients. My specialty within that group is investment-grade strategies.

Which segments of the market do you focus on to serve financial advisors?

MacKay Municipal Managers sub-advises the MainStay lineup of municipal bond funds offered to financial advisors and we set ourselves apart as an active manager. We focus on investment-grade and high-yield municipals as well as specialty states such as California and New York.

As a longstanding institutional investor, we tend to focus on segments of the market where access for many investors may be limited. The landscape has changed for financial advisors where direct access to the municipal marketplace with individual bonds has become problematic. Many advisors use us as a complementary strategy to some of the more traditional approaches that many clients have taken over the years.

As an example, for clients with traditional separately managed accounts (SMA) or a laddered portfolios, we explain it to the advisors and say, “That’s fine. It has some limitations and here is a product like our MainStay Tax-Free Bond fund (MTBAX) that may help overcome some of those limitations. Your client has the potential to pick up income, pick up total-return capability; in addition to that, he or she may pick up diversification and liquidity.”

Some clients may not want to sell an individual municipal bond out of an SMA, so they can look to a mutual fund to augment what they are doing and add that type of liquidity feature into the mix. It is an asset allocation process.

With all of our products, we complement the advisor’s approach, shed light on where we think the value is in the municipal marketplace, and deliver that to their clients. Clients’ may reach a better risk-adjusted return profile by taking this complementary approach.

By Robert Huebscher, read the full article here.

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