Breckinridge® Limited Duration Municipal Strategy

A separately managed account that seeks to generate federally tax-exempt interest income while limiting risk to principal. The average portfolio duration has a target between 2–3 years.

Investment objective: Seeks to limit risk to principal while generating federally tax-exempt interest income. Both national and select state- preference options are offered (state-preference increases exposure within that state but exposure varies and generally is less than 100%.)


Types of investments: Primarily high-quality investment-grade1 municipal bonds at time of purchase

Investment minimum: $350,0002


Eligible Registration Types: Taxable only


Gross annual advisory fee: 0.35% – 0.40%3 (varies based on total assets invested)

Focus on high-quality bonds

Graphic is meant to illustrate our focus on high-quality bonds in managing the Breckinridge Intermediate Municipal Strategy. While we seek to maintain an average credit quality of AA, we may hold bonds rated anywhere from A- to AAA at the time of purchase. We work to balance your desire to reduce the effect of interest rate changes with your income goals by investing in high quality bonds. The average credit quality of the bonds in your SMA will be at least AA, with nothing rated below A-, at the time of purchase. High quality, or investment grade bonds, tend to be more reliable sources of interest income and are generally a lower risk of default than low-quality, or non-investment grade bonds. It's part of our effort to generate the income you're seeking without taking on unnecessary risk.



Predictable tax-exempt income


Depending on your tax bracket, the after-tax return on municipal bonds may be more beneficial than those offered by taxable bonds. A key benefit of municipal bonds, particularly for investors in high tax brackets, is their ability to offer federally tax-exempt interest income. Interest income from some municipal bonds may also be free from state income tax, depending on your state of residency.


Illustrative example of a $100,000 investment in 10-Year AAA Muni bonds and 10-year taxable US treasury bonds across different tax brackets comparing after-tax yields.

This hypothetical example shows annual income from a $100,000 investment in a taxable account and the impact to that income from the four highest Federal tax rates. The municipal bond investment has a 2.28% assumed yield and the taxable US Treasury yield is assumed to be a 3.83% yield (Thomson Reuters and Fidelity Investments, respectively, as of 6/30/2023). This hypothetical example is used for illustrative purposes only; actual investment results may vary. It does not reflect the impact of state taxes, federal and/or state alternative minimum taxes, tax credits, exemptions, fees, or expenses. If it did, after-tax income might be lower. Please consult a tax advisor for further details.

All or a portion of the income may be subject to the federal alternative minimum tax. Income attributable to capital gains are usually subject to both state and federal income taxes.

†Rate includes a Medicare surtax of 3.8% imposed by the Patient Protection and Affordable Care Act of 2010.

Balance income vs. risk


Municipal bonds historically have had a lower level of default risk relative to other types of bonds. By maintaining a portfolio of investment-grade municipal bonds, with a significant portion having a credit rating of AA– or higher, Breckinridge Limited Duration Municipal Strategy is built to help limit risk to your investment and to seek a steady, reliable stream of income over the long term. The strategy has a philosophy centered on a research-based approach that balances the opportunity to generate income and capital appreciation with a focus on risk management.


This table compares the relative 10-year average cumulative default rates of municipal and corporate bonds over a 52-year period, between 1970 and 2022. The data shows two trends. First, the municipal bonds have defaulted at lower rates than similarly corporate bonds. Second, that a higher credit rating has, over the time period shown, been associated with a lower default rate.


To also help manage risk, the strategy targets an average duration5 similar to the duration of the Bloomberg Managed Money Short Term Index.6 This index is a 1–5 year municipal bond index which typically has an average duration of 2-3 years. In general, portfolios with shorter durations are less sensitive to changes in interest rates than portfolios with longer durations.

Tapping Breckinridge's Fixed Income expertise

Breckinridge Capital Advisors, Inc. has an investment philosophy that seeks to carefully analyze and manage risk, while investing opportunistically in an effort to improve incremental returns. Breckinridge strives to add value through efficient trading, bottom-up credit research, and proactive portfolio management, while avoiding what it views as excessive speculation. These strategies are balanced with a commonsense approach based on the seasoned judgment of its investment team.


This graphic describes the 3 elements Breckinridge uses to strike the right balance between managing risk and pursuing returns.

Breckinridge's proprietary technology and broad network of over 140 dealers allows the firm to trade municipal bonds efficiently by providing:

  • The flexibility to find value in both the primary and secondary markets.
  • The ability to take advantage of opportunities in both large and smaller lot sizes.
  • The capacity to seek lower transaction costs relative to the broader market.


This graphic helps explain the Breckinridge investment team's approach to portfolio construction. This approach is comprised of two elements: Top Down activities and Bottom Up activities.

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