December 2, 2016 is the ex date, payable date, and reinvestment date for a long-term capital gain in the amount of $0.00897 per share, applicable for all share classes, and payable to shareholders of record as of December 1, 2016.
With the 2016 election cycle behind us, we share observations regarding the municipal, equity, and corporate high yield bond markets.
Within the past 5 years, we’ve seen two periods in which volatility spiked in the municipal bond market; in 2011 following inaccurate predictions for the municipal bond market made by an equity analyst, and in 2013 during what’s been dubbed the taper tantrum. Although municipal bond yields rose in the days immediately following the 2016 elections, we don’t anticipate that this downturn will last as long as the two prior periods. As of mid-November, we were already seeing the Treasury market improve a bit. We believe the market is focusing on a couple of topics, one being infrastructure spending. President-Elect Trump has spoken extensively about significant new infrastructure spending, and along with that, he has discussed reductions in tax rates for both individuals and corporations. The combination of extensive infrastructure spending and lower taxes has raised concerns that the U.S. deficit could rise dramatically, which tends to be inflationary, and drive interest rates higher. Read more “Post-Election Market Views”
The funds listed below may pay a capital gain distribution in December, 2016. The amount reflected represents an estimate, per share, as of the date indicated. Printable Version
Aquila Three Peaks Opportunity Growth Fund1 $0.00 $0.01
Aquila Tax-Free Trust of Arizona2 $0.00 $0.01
Aquila Tax-Free Fund For Utah2 $0.00 $0.01
1 Represents undistributed gains from fiscal year 2015 which must be distributed.
2 Represents undistributed gains from fiscal year 2016 which must be distributed.
Aquila Three Peaks Opportunity Growth Fund: In the event that capital gains distributions are declared, the fund is anticipated to have a record date of December 1, 2016, an ex-date of December 2, 2016, a payable date of December 2, 2016, and a reinvestment date of December 2, 2016.
All Other Funds: In the event that capital gains distributions are declared, the funds are anticipated to have a record date of December 29, 2016, an ex-date of December 30, 2016, a payable date of December 30, 2016, and a reinvestment date of December 30, 2016.
Estimates are subject to change depending on market conditions, board approvals, and other circumstances. This report is the result of estimates and is based on information available as of October 31, 2016. The amount and character of distributions will be finalized on the record dates.
Although the funds listed below could pay capital gains distributions in December, 2016, at this time, a capital gain distribution is not anticipated.
Aquila Tax-Free Fund of Colorado
Hawaiian Tax-Free Trust
Aquila Churchill Tax-Free Fund of Kentucky
Aquila Narragansett Tax-Free Income Fund (RI)
Aquila Tax-Free Trust of Oregon
Aquila Three Peaks High Income Fund
Shares of the Funds may only be sold by offering the Funds’ Prospectus. Before investing in a Fund, carefully read about and consider the investment objectives, risks, charges, expenses, and other information found in the Fund prospectus. The prospectus is available from your financial advisor, and when you call 800-437-1020 or visit www.aquilafunds.com.
During a recent MoneyLife interview, Sandy Rufenacht talked about expectations for the Federal Funds rate, the potential hazards of reaching for yield, and the importance of knowing what you own.
Mr. Rufenacht pointed out that a rising rate environment generally has less impact on the high yield corporate segment of the bond market since the segment is less duration-sensitive, given that maturities are typically shorter and coupons are typically larger.
As the current period of very low rates has stretched on, investors have been reaching for additional yield by increasing positions in longer maturity or lower quality bonds, either of which may exhibit higher volatility in a risking rate environment. The high yield bond market is a large asset class with a range of quality ratings from BB on the high end, through CCC and defaulted issues on the low end. Mr. Rufenacht feels that reaching for yield in the lowest quality high yield bonds entails risk that is comparable to the equity market, which may actually provide more liquidity than the lowest quality high yield bonds.
He pointed out the importance of knowing what you own in a high yield fund. Short duration bonds in the upper range of the high yield quality spectrum can provide attractive risk-adjusted returns with less volatility relative to the lowest quality categories and equity-like securities that some managers may include in a high yield bond fund portfolio.
Click below to listen to the full interview (approximately 14 minutes).
Oregon’s Public Employees Retirement System (PERS) has once again become front page news in anticipation of the release of the 2017-19 contribution rates. The headline making news this week is that PERS now has an unfunded liability which has reached $21.8 billion or $16.2 billion when including side accounts. However, it is important to keep in mind that approximately 900 public employers participate in Oregon’s PERS, including school districts, special districts, cities, counties, and state agencies. Each of these participants has a different contribution rate and surplus or liability. System wide, rates are estimated to increase by 4.66% or 3.62% on a weighted basis.
While none of this is good news for participating Oregon local governments, it does not impact all participants equally. For example, Junction City School District and South Lane School District are both located in Lane County, and both serve the mission of educating K-12 students. However, Junction City School District has a total net contribution rate of 22.33% of covered payroll for tier-one/tier-two employees while South Lane School District has a net contribution rate of 4.37% of covered payroll. These rates are also affected differently by the proposed increases; Junction City School District’s contribution rates are estimated to increase an additional 4.61% to 26.94% while South Lane School District’s rates are estimated to increase 3.69% to 8.06%. Due to the large variance in rates and liabilities, we review each holding on an individual basis rather than resorting to broad generalizations. Read more “Oregon’s Retirement Conundrum”
Shareholders of Hawaiian Tax-Free Trust are cordially invited to attend their annual shareholder meeting Thursday, September 29, 2016 at 10:00 a.m. at the Ala Moana Hotel, Hibiscus Ballroom, 410 Atkinson Drive, Honolulu, Hawaii.
Shareholders may also attend the shareholder outreach meeting on Tuesday, September 27, 2016 at 5:00 p.m. at the Maui Arts & Cultural Center, Haynes Meeting Room, One Cameron Way, Kahului, Hawaii.
Attendees will have the opportunity to visit with Trust Executives, Trustees, the Portfolio Managers and hear renowned Hawaii economist Paul H. Brewbaker speak about the Hawaii economy.
Please plan to attend. We look forward to seeing you.
Shareholders of Aquila Tax-Free Fund For Utah are cordially invited to attend their annual shareholder meeting Thursday, October 20, 2016 at 8:30 a.m. at the Little America Hotel, 500 South Main Street, Salt Lake City, Utah. A buffet breakfast will be served prior to the meeting.
Attendees will have the opportunity to visit with Fund Executives, Trustees, the Portfolio Manager and hear Utah State Senator and former Trustee, Lyle Hillyard speak about the Utah economy.
Please plan to attend. We look forward to seeing you.
Shareholders of Aquila Tax-Free Trust of Arizona are cordially invited to attend their annual shareholder meeting Thursday, November 10, 2016 at 9:30 a.m. at JW Marriott Scottsdale Camelback Inn Resort and Spa, Scottsdale, Arizona.
Shareholders may also attend the shareholder outreach meeting on Wednesday, November 9, 2016 at 10:00 a.m. at Westward Look Wyndham Grand Resort and Spa, Tucson, Arizona.
Attendees will have the opportunity to visit with Fund Executives, Trustees, the Portfolio Manager and hear guest speaker and Trustee Grady Gammage, Founding Member; Gammage & Burnham, PLC, and author of “The Future of the Suburban City: Lessons from Sustaining Phoenix”.
Please plan to attend. We look forward to seeing you.
The municipal bond market includes over 50,000 state and local government issuers, which range from small school districts to the largest cities and states. As borrowers, these issuers are required by their continuing disclosure undertakings to produce annual financial reports, which include material information that may impact the value of their outstanding bonds.
The Securities and Exchange Commission (“SEC”) has been engaged in a multi-year initiative to enhance the disclosures provided by municipal issuers, and the agency recently announced that it had reached settlements with 71 state and local issuers related to deficiencies in their disclosures. The director of the SEC enforcement division said that these settlements are expected to heighten the level of attention given to disclosures and improve compliance. Read more “Improving Municipal Bond Disclosures”
Aquila Three Peaks Opportunity Growth Fund was included in a New York Times report listing 5-Year Leaders among US General Stock Funds based on total return performance results through June 30, 2016.
The New York Times report recognizes the top 20 performing US General Stock Funds, based on Morningstar total percentage returns for the quarter, the year and five years, annualized, and the fund’s rank within the universe of Nasdaq-listed stock funds tracked by Morningstar Inc. for periods ending June 30, 2016. Only funds traded on Nasdaq with at least $50 million in assets were included.
Aquila Three Peaks Opportunity Growth Fund pursues a distinctive approach to selecting equity investments based on a long history of conducting research in the high-yield corporate bond market, and investing in high-yield issuers when research indicates they are successfully and prudently managing leverage and the corporate balance sheet. The characteristics we look for in high-yield debt issuers have helped identify opportunities for improvement in the equity performance of those companies. This strategy in the high-yield debt market is the foundation on which the strategy of Aquila Three Peaks Opportunity Growth Fund was built.
Performance quoted in The New York Times report may not be current. For current quarter-end standardized performance please click here.
Before investing in a Fund, carefully read about and consider the investment objectives, risks, charges, expenses, and other information found in the Fund prospectus. The prospectus is available on this site, from your financial adviser and when you call 800-437-1020.
Morningstar, a mutual fund rating service, compiles performance data used to derive their own ranking data. Morningstar rankings are based on total return calculations without an adjustment for sales charges.