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Fund Commentary

 
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Municipal Portfolio

as of 5/31/17

Fund Commentary

During the month of May, the short duration municipal market was affected by several factors. Demand for tax exempt investments built as investors sought short duration options in advance of a potential increase of policy rates by the Federal Open Market Committee (FOMC). Additionally, the general lack of supply of municipal bonds pushed muni versus treasury ratios to some of the tightest year-to-date. Finally, the probability of large scale tax reform, resulting in dramatically lower tax rates, continued to fade during the month, thereby stoking demand for tax exempt investments. Throughout May the short duration tax exempt yield curve was relatively flat. Weekly reset rates averaged 80 bps while one-year notes offered 90 bps. Northern Trust portfolio managers invested cash balances by purchasing daily and weekly municipal variable rate demand notes (VRDNs) throughout the month. The shape of the one-year tax exempt yield curve, coupled with the ability to tender the municipal VRDN holdings at par, made these securities the investment of choice during the month.

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An investment in the Money Market Funds is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other governmental agency. Although the Funds seek to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Funds.

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