The Sierra Municipal Bond Program seeks to produce satisfying long-term returns while limiting downside risk. The interest income from municipal bonds is tax-free at the federal level, providing a particularly valuable benefit for clients in relatively high tax brackets. The strategy diversifies a client’s account among at least four, often up to ten, municipal bond mutual funds. Each holding is monitored daily, and during significant declines, the team implements a defensive stop-loss discipline with the goal of limiting drawdowns. The strategy will be fully invested when there are many buy signals and will, at times, be fully in cash when the universe of municipal bond mutual funds are showing sell signals.
Targets an average annual total return of 3%-4% or more per year, after fees, while limiting downside risk to 5%, even in a bad month or quarter.
On a maximum tax-equivalent basis, targets an average annual total return of 5%-6%.
*Although Sierra believes its risk-mitigating disciplines will continue to limit the impact of major market declines, no assurance can be given that these goals can be consistently achieved in the future.